The Pre-Retiree Coverage Gap
Employees who retire before age 65 face a coverage gap between their employer coverage and Medicare eligibility. This gap can be bridged through COBRA (up to 18 months), ACA marketplace plans, or a retiree health plan if the employer offers one. The cost of coverage during this gap is a significant financial planning challenge for pre-retirees.
COBRA as a Bridge
COBRA allows pre-retirees to continue their employer coverage for up to 18 months after retirement. The cost is 102% of the full premium — typically $600–$1,800/month for individual coverage. COBRA is expensive but provides continuity of coverage and network access.
Pre-Retiree Financial Planning
Pro Tip
Pre-retiree benefits planning is a valuable service that improves employee satisfaction and helps employees make informed retirement decisions. Offer pre-retiree benefits planning workshops that cover COBRA, ACA marketplace options, Medicare enrollment, and HSA strategy. Employees who understand their options are more likely to retire on their own timeline — rather than staying longer than they want to because of healthcare coverage concerns.