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PERSONAL FINANCIAL PLANNING

fundraising site GoFundMe yields thousands of remainder of the plan year once that out-of-pocket
requests for help with health care costs. And, for amount is reached.
the many Americans living with chronic conditions
like multiple sclerosis, diabetes, and even recur- EXAMINING THE OPTIONS FOR INDIVIDUAL
rent cancers, having subsidized health insurance is HEALTH INSURANCE
non-negotiable. Once clients realize that there are viable choices
However, people who typically require little beyond employer-provided health insurance, they
health care beyond annual screenings and occa- may be open to alternatives that could allow them
sional treatment for acute illness or injury may want to retire before Medicare eligibility. The options
to rethink how much insurance they really need. that early retirees can explore for covering their risk
Data shows that most people pay far more for of health-related costs include the following:
health insurance than they would for the health
care services they actually consume through their Retiree coverage through an employer or union
health insurance. While the nature of insurance is Certain employers provide health care coverage for
sharing risks, the point is that they may be over- retired employees. These are typically public service
insuring. Many people choose plans that provide jobs that are union-based or larger companies with
more coverage from the first dollar, but at a higher an employee population that tends to be older.
price each month, rather than high-deductible,
lower-premium plans. This typically means that Spousal coverage
they are contributing significantly higher on the Obtaining coverage through a spouse’s plan is a
front end through premiums but fail to use the common solution for individuals who want to retire
health care services that their insurance pays for on early, although misconceptions may exist about
the back end. timing and qualifying for coverage.
One reason people choose plans with high If a client isn’t already on their spouse’s plan,
premiums is because they believe these plans give they may think they need to wait until open enroll-
them more protection against catastrophic events. ment to retire and join, but this is not true. The loss
This is true regarding the initial costs. However, of coverage by a spouse is one of the exceptions
they may not realize that all ACA-compliant to changing benefits elections outside of the open
plans have an out-of-pocket maximum of less enrollment period, meaning the retiree can join a
than $10,000 for an individual, meaning that if spouse’s plan midyear.
an individual accesses in-network care for any For clients who are not married but are in
purpose, including expensive services like surgeries committed partnerships, it’s worth checking on the
or cancer treatments, all costs are covered for the availability of domestic partner coverage. Though

IN BRIEF

■ Clients who are otherwise financially ■ Options for funding health care costs establish residency in a country with
prepared for retirement probably for the gap years until Medicare a government-run health care system.
don’t need to defer their goal of begins include coverage through Part-time jobs that come with health
retiring early simply because of a spouse’s plan, HealthCare.gov benefits can be a reasonable choice for
concerns about how to pay for health marketplace plans, COBRA coverage, some clients. The least desirable option
care costs until they’re eligible for short-term health insurance (e.g., for is going uninsured.
Medicare. If generally healthy, they catastrophic coverage), and medical ■ Clients who retire early may need to
may be able to adequately protect cost-sharing plans offered through become educated about how to shop
themselves against risk with a lower- faith communities. In addition, some around for health care services if they
cost alternative to the types of health clients may be entitled to retiree choose a less generous insurance plan
insurance plans they may have had benefits through an employer or than they had during their working
through their employer. union. Adventurous clients can seek to years.
To comment on this article or to suggest an idea for another article, contact Courtney Vien at Courtney.Vien@aicpa-cima.com.

16 | Journal of Accountancy April 2023