What is the Best Choice of Health Insurance Before Medicare?

 If you have been thinking of retiring early, you know that one of the biggest factors is health insurance before Medicare. One listener asks whether Obamacare or COBRA would be the best option. Another listener writes in with a question about investing his home equity in the stock market. You’ll hear my responses to these 2 questions plus an update on my Equifax settlement money. I know you’re curious to learn whether I received my $125 from the Equifax settlement, so listen in to find out. 

Are you curious to learn about what happened with my $125 Equifax settlement? Listen to episode 107 to find out! Click To Tweet

Outline of This Episode

  • [1:12] My Equifax update
  • [3:39] Should someone get COBRA or Obamacare?
  • [8:27] Should someone use equity from their house to invest in the market?

What are some options for health insurance before Medicare?

One of the biggest questions to retiring early is how to cover your health insurance. There are a few options available to get health insurance before Medicare. 2 of these options are COBRA and your state’s health insurance exchange. Unfortunately, there is no one-size-fits-all answer to the eternal health insurance question. The answer really depends on your specific situation. 

One of the biggest questions to #RetiringEarly is how to cover your health insurance. Click To Tweet

What are the differences between COBRA and Obamacare?

COBRA will cover you for up to 18 months after you retire. One benefit to COBRA is that it will be identical coverage to what you had while working. The bad news is that you will now pay 100% of the premium (and in some cases 102%). Since COBRA lasts only 18 months then the closer you are to retirement age the better it will suit your needs. Some people would prefer to pay a bit more for the convenience of having the same coverage. If you really like your doctors and your coverage, then COBRA is a good option.

The quality of the health insurance exchange varies from state to state. If your combined income for a household of 2 is under $67,000 then you will qualify for a subsidy. It is important not to guestimate when dealing with the insurance exchange. If you are even $1 over you’ll have to pay back the entire subsidy. Listen in to hear why it is so important to make sure you sign up for Medicare right when you turn 65. 

Should a listener use equity from his house to invest in the stock market?

One listener lives in California and has his home nearly paid off. He thinks they have adequate retirement savings, but considering mortgages at such a low-interest rate he is wondering if it would be a good idea to take a mortgage while he is still working and invest the funds in a diversified portfolio. He would then make the payments from the portfolio. He says his objective would be to have cash in retirement rather than have the value locked up in his home.

Think of your home equity as a super-sized insurance plan. Click To Tweet

Consider your home equity to be your plan B

Before you rush off to the mortgage company let’s do some thinking. What specifically are you trying to accomplish? Are you trying to catch up on retirement savings? Do you just like the idea of having more wealth? Most of my clients that are debt-free are less stressed and happier than my clients with debt. Your home’s equity is an excellent contingency plan for all of the scary things that can happen in retirement. Think of it as being a super-sized insurance plan. Rather than making your home equity your plan A you might consider it as plan B, C, or D.

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