Health insurance for early retirees in Arizona

When you retire from your job before turning age 65, you will likely lose your group health insurance coverage. You will then need to find a new health insurance plan to cover you until you qualify for Medicare.

You may have a number of options to choose from when selecting a health plan. The best choice for you likely depends on your income, your health, and the network of medical providers you want access to.

COBRA (continuing group coverage)
You may be able to continue your group health insurance benefits through COBRA. The COBRA Act, passed in 1986, is a federal law that requires employers with 20 or more employees to allow employees to continue their health coverage after leaving employment. In most cases, you can keep COBRA coverage for up to 18 months. However, your employer will no longer pay a portion of your premium, so the coverage may be very expensive. If you are generally healthy, finding other coverage is probably a better option.

Here are a few scenarios in which getting (or remaining) on COBRA may be a good choice:
– You are very happy with your plan and are ok with the monthly premium cost.
– Your doctors accept your COBRA plan but do not accept other coverage options you have found.
– You take medication that is affordable on the COBRA plan, but is much more expensive on other options you have found.

Obamacare/ ACA Plans 
Depending on where you live in Arizona, Obamacare (Affordable Care Act) plans are available from carriers such as Ambetter, Blue Cross Blue Shield, Bright Health, Oscar, Cigna, and United Healthcare. When you lose group coverage, you have a “qualifying life event” that allows you to enroll in a plan even if it is not currently an Open Enrollment period. Plans are required to accept you and must cover pre-existing conditions. Depending on your household income, you may qualify for a tax subsidy that makes these plans substantially cheaper. For example, a 62 year old living in Phoenix with an income of $50,000 qualifies for a $533 monthly premium tax credit. The full price for this individual for Ambetter Balanced Care 9, a popular ACA plan in Arizona, is $998. The monthly tax subsidy brings the cost of the plan down to $465 a month.

Pros: Guaranteed coverage, big tax credits, HSA (health savings account) options, preventive care covered at 100%
Cons: Limited HMO networks, expensive if you don’t qualify for a tax credit, high deductibles

Short Term Health Insurance/ non-ACA plans
Short term health insurance plans are an alternative to traditional major medical health insurance and can be kept for up to 3 years. These plans are ideal for people who do not have major health issues and make too much money to qualify for a tax subsidy under the Obamacare marketplace plans. The plans do not cover pre-existing conditions, so they are not a good choice for people with major health issues. They will also deny coverage to you for certain conditions including cancer, diabetes, and heart conditions. (These types of plans can refuse to cover you since they are not required to comply with the Affordable Care Act.)

Pros: Access to nationwide PPO networks (including Mayo Clinic), about 50% cheaper than Obamacare if you don’t qualify for a tax subsidy, can apply any time (not subject to Open Enrollment)
Cons: Do not cover pre-existing conditions, can refuse to cover you

Health Care Sharing Plans
Another option is a healthcare sharing ministry plan (HCSM). Healthcare sharing plans are an alternative to traditional health insurance and are growing in popularity– they are not insurance and are not regulated by the Department of Insurance. The monthly cost is usually very affordable compared to full-price ACA plans, however coverage for pre-existing conditions is limited and there is no guarantee of coverage. Medical bills are submitted to the company and then a decision is made whether or not to “share” the cost of your bill.

AHCCCS (Arizona’s Medicaid program)
AHCCCS is Arizona’s Medicaid program offering healthcare to low income residents. There has been a surge in AHCCCS enrollment due to COVID, and 30% of the people in Arizona are now covered by AHCCCS. A single person can qualify for AHCCCS with a monthly income of $1,428. For a household of 2 people income can be up to $1,931. (see income guidelines) To apply for AHCCCS coverage, visit or call 1-855-432-7587.

Finding the Right Plan For You
When you start your retirement early before turning 65, it is important to find health coverage that will get you to Medicare. If you’d like to go over your options, give me a call at 1-800-600-9663 ext 15, send me an email, or fill out this online form and we will get back to you right away.

Author: Chad Lehrman
Licensed AZ health insurance broker since 2002.