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Hi Adam. I will be 64 in January and have another year before I can sign up for Medicare. I decided this year to retire early and I will lose my company’s health insurance. I need a health care plan to get me through until I am eligible for Medicare but won’t have a ton of money to spend. What are your suggestions?

The good news is that you will have plenty options to choose from once you retire.  The bad news is that all of them limitations.

The easiest and straightforward is to self insure.  If you are in reasonably good health and have savings you can forego health insurance all together and pay for your routine visits and medicines out of your pocket until Medicare begins.  The drawback to this option is that a major health concern or diagnosis has the potential to wipe out your hard earned savings.

The least expensive option to cover this gap is by purchasing what is known as a short term policy (STM).  These policies are designed to cover gaps in coverage (changing jobs, coming of parent’s insurance, etc).  STMs tend to have higher deductibles and provide coverage for major events such heart attacks and strokes but are generally lacking in routine coverage such as doctor visits.

Hospital Indemnity plans are affordable health plans that provide coverage for routine visits and major events.  These are excellent alternatives to traditional major medical policies but they do require some responsibility on behalf of the client.  In order to make best use of these plans the client must shop to find the best price for medical procedures.  These plans also generally have 12 month waiting periods on pre-existing conditions so any current ailments will not be covered for one year.

The most expensive option is to purchase a traditional major medical policy.  These plans can be acquired without health questions and offer coverage for existing conditions from day 1 of the policy.