Retiring Before 65? Your Health Insurance Timeline Explained 

Aaron Miller (00:32.34)
So I want to put it on you first. We give people a lot of advice. I'm gonna get into a specific topic, but I wanna talk a little bit about why we're even the experts in health insurance. What what has gotten us to the point where we are having this conversation?

Matt Allen (00:50.357)
Interesting.

Well, I fancy myself, you know, the smartest guy in any room I walk into. But why are we the experts? I think it's because we've embraced the role more than anything else. There are so many insurance agents, insurance brokers, brokerages, agencies out there all across America, and

I honestly believe the majority of them, they're just trying to do too much. I mean, how I was initially trained when I started 11 years ago. It's 11 years ago almost exactly. it was September 2015. And I remember sort of being trained, I didn't know anything, but I remember being trained to you can always help you you want to be able to help everyone.

I was like, I really like that. Nice. We can help everyone. And then it took me down this rabbit hole over and over and over again of like chasing this one very unique, specific situation to its conclusion. And so I got a lot of information about that, but it was kind of in a very delicate and sensitive way, a waste of time.

Because this is a total one-off situation for this one person who had this one situation where I had to go down this rabbit hole and I spent all this time. And it's because I always beat my chest and I said, anybody who's got a health insurance issue, I can help them. And so that did two things. It wasted a lot of my time, but it also

Matt Allen (02:43.061)
Expose me to a lot of different situations, so I wouldn't go back and do it differently. But now that I'm 11 years past, we've built a business, I have some clients, I've got some trust, we've got referral partners, we've got data on who we can help the most and the best, and the people who need the most help, and now we've niched.

We've gone from helping everyone in every situation, as long as it had to do health insurance, to a very specific set of people, the early retiree.

Somebody who is leaving work insurance and has to go buy insurance for maybe the first time ever. And that transition can be daunting, it can be scary, it could be intimidating, you could just have no idea where to start. You could postpone it for so long that you just work all the way to 65 and you don't even retire early because you're like, I just don't want to deal with it. I don't wanna I don't wanna have to go through the hoops of figuring out how to buy insurance.

So we found that those people value our expertise, they want the help, and they're willing to listen to the help and learn what their best situation is. And so we decided to just become educators. So we created this educational platform called Plan Shaman, because we want all of this information to be out there.

and you decide what the best fit is for you. And so it is coming from the expert. It's like like if you went to university, you went to grad school and you take a very specific course on like the macroeconomics of Southern African nations or something like that.

Matt Allen (04:43.373)
The person who's teaching that has to be a total expert in just that. But they may have no idea about the macroeconomics of Northern Africa. They might they might just be clueless on that. Now I'm not saying I'm clueless across the board about health insurance, but other insurances outside of health insurance, we we stay in our lane. We're all about health insurance and we're niching down to this. So it came from a very wide scope.

And now it's starting to narrow our focus. And this has a very awesome downstream effect. That if this is all we're focused on now are helping those people transition from corporate insurance. So so whether it's going into business for yourself or retiring early, you're that tr that

transfer that transition from work insurance to the individual market. We've seen that now thousands of times across 27 different states. And we're sharpening our tool on that. And so we're becoming the absolute expert in that. So if you need the macroeconomics of Southern Africa, that's the course you take. If you need to move from corporate insurance to individual insurance, Plan Shaman is the course you take.

Aaron Miller (05:55.094)
Absolutely.

Aaron Miller (06:00.811)
I love it. I think it's helpful to give people some color on why we feel that we have the expertise to give this information confidently so that way they can make real world decisions. I mean that's that's the goal here.

Matt Allen (06:16.527)
And I think what it comes down to is the track record of having done it for a decade and the fact that we're shutting out all the other noise and that's all we're focused on. We're not trying to throw in, you know, here's here's life insurance too, or well, did we talk about your long-term care insurance? I'm not I'm not belittling those insurances, those are very important.

But we specialize in one thing. That's all we want to do. And so we're the best at it. And we can give the best advice. We put our name on it. We put our face on it. We have in-house customer service. You know, if you become a client of ours, we're gonna help you with it up until you get to Medicare and beyond. That's what we wanna do is help with that transition.

Aaron Miller (07:00.235)
Love it. All right. Now for the main topic of the day. Let's talk about that transition. Let's talk about timelines with that transition.

Matt Allen (07:10.287)
Okay. No, I want to hear set me up.

Aaron Miller (07:11.69)
So go ahead.

Aaron Miller (07:17.269)
So I'm thinking, you know, let's put ourselves in the shoes of a 61 year old. It's been working at this corporate job. You know, they're ready to retire any day, but they're they're still working. The paycheck's great. The benefits are great. You know, maybe they haven't made that decision yet. Maybe because they don't know what the health insurance looks like on the other side, or they just haven't haven't had that push. When should that person start looking?

And what is the benefit to looking early?

Matt Allen (07:51.598)
Okay. Well the benefit to looking early I think is to get you closer to actually being retired. It's how how much value is an early retirement going to add to your life? You know, you've worked this corporate job, you've saved, you've, you know, been wise and responsible with your money, been a good steward of this, and the the upside to that is getting to enjoy it.

Aaron Miller (08:01.357)
Uh-huh.

Matt Allen (08:19.779)
When you're retired. You know, you travel, visit the grandkids, maybe just hang out with your spouse more. I don't know. Start the garden. Doesn't matter. The sooner you start learning about it, the sooner it becomes a reality. Well, first it's gotta become a possibility, and then it'll become a reality. And

Aaron Miller (08:20.076)
Yeah.

Matt Allen (08:42.401)
As far as timelines are concerned, it's it's really about when you're ready to pull the trigger. Now I will say if you work with a financial advisor, some sort of financial planner, get them in the loop as soon as possible. Because they are going to know if you have enough money to retire early. We can always plug in and fix the health insurance aspect.

You gotta make sure the financial aspect is there first. But if we assume

The financial aspect is there first. We've got enough money to retire. Now we need to look at how do we bridge that gap? Because you mentioned, hey, the salary's good, but they've got enough money. You also mentioned, hey, the benefits are good. What are we going to do about benefits? If you're 61, you've got three plus years to bridge until you get to Medicare, and potentially a spouse, spouse could even be younger than that, with even more years to bridge to Medicare. If you were to leave that job, you've only got 18 months of

A Cobra. So you kind of need to understand what are the other options. We're not saying don't take Cobra for those 18 months, but you're kind of just kicking the can down the road on making that transition to a different health insurance coverage. And so as soon as your financial planner says, Hey, you can retire.

safely financially, I think that's the time to start learning about it. That's stuff that's the time to start figuring it out. Now there will be, you know, let's talk options. There there will be certain corporate jobs that have these things called retiree plans where you can just stay on the insurance all the way to 65. We love those. If it if it fits into your financial budget for your retirement with your advisor, just take it. Take that retiree plan. It's gonna be the same coverage that you had before. It's gonna be really high quality coverage. It'll take you all the way to

Matt Allen (10:36.921)
65 and it fits if it fits into your financial plan, there's no reason to get us involved. Just take it all the way to 65, you're home free. Those are extremely rare, though. the majority of places will just say, Hey, yeah, we'll offer Cobra. Well, Cobra is gonna take you 18 months. Again, that's just kicking the can down the road. So, you really want to start learning about what are the non-cobra, non-retire, under 65 health insurance plans that are available on.

the individual market and that's what our educational platform specializes in and that's kind of the our process of holding your hand through that decision and showing you hey this is what that looks like this is what this looks like this is what this looks like here is the information for you now in an ideal situation we figure out what we're going to transition to about six months prior to hey I'm retiring

We can do it in as little as seven days if we need to. But if you're watching this, listening to this, or interested in retiring early because you've been, you know, very responsible with your money, you're probably not rushing this decision. And we don't recommend rushing this decision. So about six months out is a great time for an introductory call. Two months out, anywhere from two to six months. Perfectly acceptable, plenty of time to make this decision. And then we can actually put the

plan into place when we are two months out from that retirement and we always recommend do it as soon as you're able to so we can get those applications finished, we can get all the T's crossed, the I's dotted, get your portal set up, get your cards in hand, you can have an onboarding call with our client success team and just have everything smoothed over, all your questions answered before the plan has to begin. So six months out is really good to actually meet with us.

if you want to meet with us, but you can do it months, years out if you're willing to, you know, self-self-educate and go through the learning platform, the educational platform.

Aaron Miller (12:47.531)
Yeah. It's funny, the people we've seen come through Plan Shaman already. Some are thinking, May of next year, end of this year. One guy in the fire movement said, I'm probably a year and a half, two years out, but just wanted to get my, you know, information so I can, you know, know what to budget. And so I think it's really interesting to think about all the different situations, you know, that come into play. You said s up to seven days, right? Is like the narrowest.

We can we can get this in place. So like let's let's talk about someone who needs, you know, the the lightning fast. Gotta get it done now. They they got let go from the corporate job, 61, downsizing, you know, they got the cobra paperwork today. You know, it's what is it right now? It's the fifteenth of September. What what does that person do?

Matt Allen (13:40.067)
Mm-hmm.

Matt Allen (13:43.576)
So that that absolutely can happen. You got corporate downsize, maybe some AI bot came in and took your job, and they're like, hey, you you're out of here. And maybe, maybe you're financially secure enough to retire, but this is a little bit of a jarring situation. my God, what am I going to do about benefits? Opting into Cobra when it's something that abrupt.

And that out of nowhere I don't think is a bad option whatsoever. But there's also a little wrinkle with Cobra that not a lot of people know about. Cobra is offered to anybody who loses their job or voluntarily quits and they've had this corporate insurance. And Cobra is not some other insurance company. Cobra is the name of an act. It's like the consolidated omnibus budget reconciliation act.

Aaron Miller (14:33.505)
Got it. Yeah.

Matt Allen (14:33.519)
I think I nailed it, of nineteen eighty-five. So it's been around forever and it was to protect workers from basically just getting fired if they got ill i so that the business owner could get off their health insurance plan and not, you know, have the rates go up huge.

It was a protection measure. And what that means is you can keep your same work plan for up to 18 months, you and any dependents who are on it. You just now are paying the full freight of it. So one of the one of the top things that people know about Cobra is like, I know it's expensive. Well, the reason that it's expensive is because when you're working at a corporate job and you're getting your health insurance through them, you are likely contributing something per paycheck. It's your employee contribution.

But the employer is absolutely contributing to that plan, at least for you as an employee and possibly also for your dependents. So when you get that first Cobra bill, a lot of times it's shocking because you're used to maybe $300 a month coming out of your paycheck, and then you get the Cobra bill for you and your spouse, and it's $1,800 a month. You're like, hold on a second. I thought health insurance was $300 a month, which

Unless you've been living under a rock, you probably understand health insurance for a a couple isn't gonna cost three hundred dollars a month in this country, but it can still be jarring. Eighteen hundred a month? What are you talking about? Well, that is your three hundred a month plus the fifteen hundred a month your employer was contributing. Then they tack on a two percent administrative fee. So

It can be a little bit jarring, but here's the wrinkle for Cobra that a lot of people don't know about. You don't need to opt in or opt out for 60 days after you lost your coverage. So in this scenario, if they somebody got let go today, their coverage would run through the end of the month, and Cobra would technically start October 1st. They could keep it October, November, December, all the way 18 months.

Matt Allen (16:34.499)
But in this hypothetical situation, they're 61. So it won't get them all the way to Medicare. And maybe now that they got let go, they're like, screw this. I'm not going back out in the job market. I'm all done. I'm retired. I'm not putting together a resume and going through interviews. We're done. We got enough money. We're gonna do it. Maybe this is a blessing in disguise, getting let go. All right. They might not be comfortable rushing a health insurance decision in two weeks.

They might not know where to look. They may have never heard of Plan Shaman. They may just sign up for their for their educational platform course and start going through it and like, God, I gotta make this decision in two weeks. Absolutely not.

You have a 60-day grace period on Cobra where you don't have to say yes and you don't have to say no. And so you can take your time and you could start a new plan November 1st. You could start a new plan December 1st. And the very cool part if you were let go right now is the annual open enrollment period coincides with you could have a plan start January 1st. And by not opting in or opting out of Cobra right away, it keeps your options open.

Because once you opt into Cobra, you voluntarily ending it does not create

A new enrollment period for you to hop on any other plan. Because when you initially lose your work coverage. So at the end of this month, starting October 1st, losing that work coverage for this person, that's something called a qualifying life event, which opens up a special enrollment period. So not only do you get a 60-day grace period on Cobra, but you get a 60-day special enrollment period where you can hop onto any of these other plants that might be a better fit, that might get you all the way to 65.

Matt Allen (18:22.833)
And so by not rushing your decision, keeping Cobra in your back pocket while you figure it out.

If you need to enact Cobra for October, go ahead. If you need to enact Cobra for November, go ahead. Your open enrollment period for any of the other options still exist. To have a plan start October 1st if you're if you're good rushing it in two weeks, or November 1st or December 1st, and then we have the open enrollment period, it could start January 1st. So tons of flexibility there. Don't feel like you need to make a decision in the next two weeks. Have somebody to talk to, go through

the educational platform, learn what all the options are, because it may be something you're not even considering, and we have plenty of time to put it into place.

Aaron Miller (19:11.169)
That's interesting. So let's say they do say yes to Cobra right away.

And then they wanna look at other options right away. So they they say yes because they think that's the you know, shoe in, let's let's do it. I'm still within my sixty days from losing that coverage. But if you say yes, that sixty days of losing the coverage ends right there. Is that right?

Matt Allen (19:38.902)
No, you still have your special enrollment period. The scenario that I was speaking about is let's pretend this person's laid off today. They say Cobra's easier, it's simpler, they've got enough stuff going on, holiday season coming up. We're just gonna take Cobra, we're gonna reevaluate. If they run Cobra through, let's say February of next year, and they go, All right, now we're good.

Aaron Miller (19:42.432)
Okay.

Matt Allen (20:08.173)
Now we're going to reevaluate our options. Because I still got three years to go. My spouse has five years to go till Medicare. Cobra's only gonna get us about another year. We're gonna re-evaluate in February, get something new in March or April. What I'm trying to let people understand and make sure they know is.

You can cancel Cobra whenever you want. You don't have to take it the full 18 months. But if I start it in October and I voluntarily cancel it in February, March, April, May, any of those months, I don't then create a new special enrollment period.

Aaron Miller (20:45.698)
Yes.

Matt Allen (20:46.349)
That is not a qualifying life event. Me voluntarily ending Cobra. That's not a qualifying life event. So if in February it makes sense for these people to be on an ACA plan because they'll get a tax credit plus a supplement to make sure they're covered outside the network, they can't do that in February or March. So there is a little bit of urgency if they were to be let go today. But it's a it's a two-month window. We've got plenty of time to figure it out. It's just not a two

week window that we need to figure it out by October 1st. We need to figure it out by December 1st, essentially.

Aaron Miller (21:24.279)
Perfect. And we see a lot of people who you know didn't look at their options. They were on Cobra for the eighteen months. It's real expensive. Yeah, and that's coming to an end. Is that a similar window then if someone is going to be losing Cobra coverage?

Matt Allen (21:42.082)
Right, so the natural expiration of Cobra after the 18 months has run its course, that absolutely is a qualifying life event that will open up a 60-day enrollment period. So in this example, if these people decide we're just gonna do Cobra, we don't wanna look at it yet, we are gonna kick the can down the road, we're comfortable, that's just what we're doing. Well, their cobra would start October.

and I'd run eighteen months, which would run it through March of twenty eight. Starting April first of twenty twenty eight, that's a new sixty day special enrollment period.

Aaron Miller (22:14.871)
Mm-hmm.

Matt Allen (22:22.467)
But for that, we're gonna wanna meet and figure out what the best option is, January or February of 28. So we can already have it in place April. We don't wanna, hey, we got it through the end of March, we'll figure it out in April. That's the danger zone. Start January, February, March, or even six months prior and figure it out.

Aaron Miller (22:44.363)
Yep. And so when someone's going through our calendarly link, they're able to book however far out they want. On there it says, Hey, you can meet with us to actually enroll within sixty days of when you know you're gonna lose that coverage. So it's really sixty days on both sides. Is that right?

Matt Allen (23:06.902)
Mm. Say a little bit more about that.

Aaron Miller (23:10.111)
So if you know you're gonna be, let's say, retiring February of next year. So the end of February, you're done. You could technically put into place a new policy to start in March, come like early January. Is that right? So sixty days on both sides is really when that enrollment period exists.

Matt Allen (23:35.99)
Okay, I think I see what you're saying. So I think you know what you're saying, but I just want to clarify it. So if I were let's just keep going with the example we've been using. Let's pretend I'm retiring this month. I retired today. I said September fifteenth, I'm done. I if if I knew that ahead of time, and I knew which new plan I wanted October first.

Aaron Miller (23:42.925)
Sure.

Matt Allen (24:05.121)
I looked at Cobra, I looked at all the options, I went through plan shaman, I understood what my best options were, and I was comfortable with a plan change October 1st. I could have chosen that plan and enrolled in it and applied for it as early as August 1st. But the plan doesn't start 60 days before.

I think that's a misconception. You can simply apply for it to start October first. You're only paying for it October and beyond. Where the additional 60 days comes from is if I abruptly retire September 15th, I didn't schedule anything, I didn't figure it out. I still have until December first to put in a new plan. So you can apply for it as early as 60 days out.

And then you do have 60 days past your special qualifying life event to actually put it into place. So you can think of it as that, but the coverage can't start until the old coverage ends.

Aaron Miller (25:08.557)
So it's like a proactive sixty days or a reactive sixty days.

Matt Allen (25:12.985)
There you go, absolutely. I like that. Yes. And let's be proactive. Let's get let's get our ducks in a row. We're retiring. Yeah.

Aaron Miller (25:16.311)
Perfect. Hundred percent.

Absolutely. So I wanna bring up a topic that a lot of people are very interested in, and that is the pricing. And so I know we've talked about this a lot where pricing for certain plans, specifically ACA marketplace plans, if you're planning to retire February of next year, we don't actually know those prices yet. So we can't let's say the ACA is right for you, ACA plus that private supplement.

When will they know what the new prices are so they can plug that into their equation?

Matt Allen (25:55.856)
So it's an interesting situation. They they typically come out the latter half of October. So in about a month we should be able to see plans for the next year. So ideally October fifteenth, between October fifteenth and Halloween, we're gonna get the plans for the following year released.

Now the changes that can take place are deductibles and copays are absolutely going to shift. The metal tiers can shift, and what I'm meaning by that is there was a company in Indiana who completely eliminated all their bronze plans from 2025 to 2026. They just said, we're not doing bronze anymore, but we're gonna have silver and gold. Alright? Companies can just completely leave the market as well. We've got

I think it was ten separate companies are leaving at least one state next year. So companies can just unilaterally cancel everyone who's on the plan within that state. New carriers can also come to a state. And so that's that's less frequently going to happen. But that is what we're looking at from October 15th to about Halloween: is who's leaving, who's joining.

Aaron Miller (26:55.98)
Mm-hmm.

Matt Allen (27:18.137)
How are the metal tiers shifting potentially? How are the networks shifting? Because the contracts of the insurance companies with the hospital systems have to be renewed each year as well. So now the the doctor that you were going to that was in network with this company, you've got to re-verify that they're also going to be in network the following year. You didn't really ask about any of that though. You asked about the pricing.

Aaron Miller (27:38.157)
Mm.

Matt Allen (27:42.5)
So the pricing is also updated. So all of the ACA marketplace plans, they have to file with their respective departments of insurance for rate increases or decreases, any sort of change in the rates going into the next year, they have to file and basically get them approved. And the way that they become approved is they go to the Department of Insurance and they go, Look, we lost our shirt offering this plan. We paid out way more in claims than we did premiums, whatever math, whatever calculus they've got to show the Department of Insurance.

Insurance. The Department of Insurance can then say, Hey, we approved this rate increase, or we don't improve quite that rate increase, but this rate increase is okay. That's that's gotta get that's the big hang up on what the new pricing is gonna be. Early reports that I've seen are in increasing premiums across the board about 15% again nationally, which is another huge increase. Yeah, last year they went up at least 15% almost across the board, and certain states 30-40 percent on certain

Aaron Miller (28:33.997)
Again.

Matt Allen (28:42.353)
Certain plans, it's absolutely getting insane. But what I think a lot of people aren't understanding, and this is what I want to make sure gets across, is you said to be able to plug it into their financial plan, they need to know what the new premiums are to be. And while that isn't incorrect, that's absolutely correct, I think it's important to go into what the nuance is.

The majority of the people that we believe the marketplace is a good fit for is because they qualify for a tax credit, thus making the plan more affordable, the Affordable Care Act. So our early retirees who are on the marketplace are likely there because they have control over their income.

And they can receive a tax credit, and the ACA plan is now cheaper, and then we add a supplement to fill in the holes and the whole the whole plan's about half the price of Cobra. It's all great. But that's why we're putting them on there. And so early retirees, they get a little concerned when they hear these new news articles. 15% premium increase across the board. my God, we got to talk with our financial plan. We gotta do this. Now hold on.

Because you're receiving a tax credit to help offset the costs of those premiums. And so you might be thinking, hey, the premium is going to go up 15%. Now my tax credit's going to cover less, I'm going to owe more. But the tax credit, the calculation of that, is based off the price of the plan. And so it's based off the second lowest priced silver plan available in your zip code.

As a percentage of the income that you make. So it's a very convoluted way of saying as the premiums go up, your tax credit will also go up. And so the majority of people who are on the marketplace who are receiving tax credits are not seeing a 15% in their premium increase. They might see a slight increase year over year.

Matt Allen (30:52.391)
but it's not going to be the full fifteen percent because as that premium increases, hey, you are getting a larger tax credit to help offset that.

Aaron Miller (31:01.141)
That's very helpful. Yeah.

Matt Allen (31:02.989)
Yes. So we typically do not see in our experience of doing this somebody whose early retirement plans gets disrupted because they were on an ACA plan getting a tax credit and then the ACA went up. And now what are we gonna do? Well your tax credit is also gonna go up with that.

Aaron Miller (31:21.569)
Yeah. So the only people that really hurts are those who have to be on the ACA due to a pre existing condition and their income is well above that threshold.

Matt Allen (31:32.239)
So that is the situation where you're gonna feel the full brunt of the 15% increase, is if you have to be on the ACA as an early retiree simply due to health reasons. You need that pre-existing condition coverage, you need that expensive medication coverage, whatever it is, if you're an early retiree who's paying full price for an ACA plan, you are absolutely going to feel that full 15%. And 15% is a huge increase on some of these full prices.

price ACA plans because they're already so expensive. And so I'm not saying across the board our early retirees aren't feeling feeling the hit. But ours that are receiving tax credits aren't really going to notice much. It's the ones that are paying full price that absolutely are going to feel it.

Aaron Miller (32:19.661)
Perfect. Well, as we go into the end of the year, we're gonna see all that come to fruition. And if you are planning to retire next year, you know where to go.

Matt Allen (32:31.821)
You know where to go. This has been another episode of Talking Shit. Shit, of course, is an acronym for straight health insurance talk. I am Matt Allen.

Aaron Miller (32:40.789)
I'm Aaron Miller.

Matt Allen (32:42.403)
Thanks for your time.

When should I start planning health insurance for early retirement? Start once your financial planner confirms you can afford to retire. About six months before your last day is ideal for an introductory call, and two to six months gives plenty of time. In a pinch, new coverage can be in place in as little as seven days.

How early can I apply for a new plan before my work coverage ends? You can apply up to 60 days before your employer coverage ends. The new plan starts the day after the old one ends, so you only pay from your start date. If you leave without planning, you still have 60 days after losing coverage to enroll.

Do I have to accept or decline COBRA right away? No. You have 60 days to elect COBRA, and coverage is retroactive if you elect it. That gives you time to compare options without a gap. Your 60-day special enrollment period for other plans runs at the same time.

If I start COBRA and cancel it later, can I switch to an ACA plan? Not right away. Voluntarily ending COBRA isn't a qualifying life event, so it doesn't open a special enrollment period. You'd have to wait for annual open enrollment. COBRA naturally running out after 18 months does open a new 60-day window.

When are next year's ACA prices released? New Marketplace plans and prices usually appear in the second half of October, ahead of open enrollment on November 1. Carriers can change premiums, deductibles, metal tiers, and networks, so recheck your doctors every year. If you get a tax credit, it rises as benchmark premiums rise, which cushions most increases.