Early Retirees—Alternatives to Medicare, Part II

Good to Know

This article is part II of a series to help early retirees make informed healthcare coverage choices for the years before they’re eligible for Medicare.  Remember that the first article in this series described how faith-based medical cost-sharing ministries can offer cost-effective coverage for those clients willing to accept behavioral exclusions from coverage.1  In contrast, Affordable Care Act Policies do not have behavioral limitations on coverage but premiums can be more costly.

Affordable Care Act-Summary

There’s much to like about Affordable Care Act (ACA) policies!

  • Guaranteed acceptance—You cannot be denied coverage, even if you have pre-existing conditions that require continued care.
  • No annual or lifetime caps on coverage.
  • Premium subsidies—A retired household of two with 2023 income of up to $73,250 may qualify for premium subsidies of over $250/month.
  • Free services—certain preventative services, screenings, and vaccinations must be provided free of charge.

Affordable Care Act-Flexibility

ACA policies give you the flexibility to balance premiums, benefits, and cost-sharing requirements, which vary with the type of plan chosen.  For example, a popular plan for pre-age 65 retirees is the Silver Plan, characterized as follows.

  • An individual’s monthly premium varies by state but frequently ranges from $400 to $700, subject to reduction for premium subsidies for those with low-to-moderate incomes.
  • After deductibles of about $5,000, a Silver Plan pays 70% of medical care costs and the insured pays 30% (the insurance company pays 90% in a Platinum plan but premiums are much higher).
  • The maximum annual out-of-pocket cost for covered care is about $9,000.

The Bottom Line

ACA plans are one more arrow in the quiver of potential healthcare coverage for those retiring before age 65, especially if they’re eligible for premium subsidies. Stay tuned for our next article where we’ll shine a light on “temporary” healthcare plans.

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The information presented herein is provided purely for educational purposes and to raise awareness of these issues; it is not meant to provide and should not be used to provide financial advice of any kind—including but not limited to legal, identity theft protection, investment, income tax, risk management, retirement, or estate advice. Consult an experienced, credentialed expert for detailed guidance.

1 Healthcare costs arising from smoking, drinking, illegal drug use, and premarital sex are not generally covered.