Early Retirees—Alternatives to Medicare, Part III

Good to Know

This article is part III of a IV-part series to help early retirees make informed healthcare coverage choices for the years before they’re eligible for Medicare.  In Part I, we peeled back the onion on faith-based medical cost-sharing ministries.  In Part II, we illustrated how Affordable Care Act (ACA) Policies can help. The focus of this article is Short-Term Limited Duration Insurance (STLDI) for health care costs.  We’ll break this topic down as follows:

  • Regulatory definition,
  • Pros and Cons, and
  • Client applications.

Regulatory Definition

The National Association of Insurance Commissioners (NAIC) defines STLDI as “…a type of health insurance that provides coverage to policyholders for a period of as little as a month to as long as three years.  The plans offer limited coverage and benefits.  Short-term plans may offer coverage for some of the same types of health care services as traditional comprehensive health insurance, but they have very different plan designs and are not regulated with the same consumer protections as comprehensive health coverage.”

Next, we’ll illustrate the pros and cons.

Pros and Cons


Fills coverage gaps if no other health insurance is available

Not limited to a specific network of healthcare providers

Potential for lower monthly premiums than ACA and COBRA policies

Catastrophic coverage that can prevent bankruptcy from medical costs


No Affordable Care Act (ACA) protections and no premium subsidy

Subject to medical underwriting—may be rejected for pre-existing conditions

No renewal of coverage guarantee

May not cover pregnancy

High deductibles and copays

Not available in all states

Client Applications

Short-Term Limited-Duration Insurance may be attractive to early retirees with no preexisting conditions, in good health, and without the budget to pay premiums for COBRA or private health insurance. Even then, a basic Bronze or Silver ACA policy should be compared to STLDI before making a decision.  Regrettably, you do indeed get what you pay for with this health insurance.  The allure of monthly premiums as low as $200 must be balanced against deductibles that can exceed $10,000, uncapped client co-pays of 30% or more, and a host of exclusions from coverage. The ACA requirement for minimum essential coverage does not apply to STLDI.

The Bottom Line

An experienced health insurance professional should be engaged to help your client understand and select the best available coverage within their budget.  Stay tuned for our next and final article—we’ll compare and contrast all of the early retiree healthcare options covered in this series.

Financial advisors and planners need a sound understanding of wealth-building and preservation strategies such as those presented in this article. Get that sound understanding through our CFP® Curriculum when you consider CFP® certification. You’ll discover a select few of the reasons our student pass rates are much higher than the national averages.



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.