Consolidated Omnibus Budget Reconciliation Act of 1985

Because if you can get a heavily subsidized ACA, you can keep your retirement income below that tax credit threshold and get one of these advanced premium tax credits, you have enough room in the monthly premium to address those holes that we were talking about, to address those out-of-network issues.

And so I'm a big fan if we can get the income below that threshold, because now we have room to add that supplement, and now we're still saving $1,000 a month off COBRA pricing, even with the supplement on there.

But I don't want to hamstring someone's retirement by saying, "Hey, you can only get, you know, 4,500 a month in distributions because we got to keep you below this." I don't want our people retiring early to pinch pennies.

Yeah.

And so there are options, there are alternatives, and financial planners need to know about it just as much as early retirees do.

Absolutely.

And so the final piece here, the fifth, not myth, but just misconception, is that these people who, you know, want to retire, they're 60 years old, they make too much money, maybe they're healthy, you can afford to take COBRA, so just take COBRA.

Mm-hmm.

Okay.

"On EDU show 2640, played October 6th, it was noted that the person, George, was going to retire at 64 and a half and he would elect COBRA for six months to bridge him to Medicare at 65.

Tom noted," that's you, Grasshopper, "Tom noted that COBRA extends to 36 months for the non-Medicare spouse, but I don't believe this is correct.

The COBRA qualifying event was George retiring at 64 and a half.

His spouse would therefore only be able to elect COBRA for 18 months unless she is disabled, and that would leave her with a gap in coverage before her Medicare age, presumably meaning expensive marketplace coverage would need to be sought.

Now, if George works until 65, elects Medicare and then retires, the COBRA qualifying event would be his enrollment in Medicare which does allow the non-Medicare spouse to extend COBRA for 36 months.

Anyways, I just wanted to get your thoughts on this.

I found it interesting, a little nuance there in timing.

Now, for those who retire before age 65, there are generally a few different health care coverage options.

You know, one option is COBRA, which allows you to remain on your employer's plan for up to 18 months in many circumstances.

However, COBRA is super expensive because you are generally responsible for the full premium, including the portion your employer previously paid.

The other common option is the Affordable Care Act exchange or the ACA marketplace.

How expensive that coverage comes down to how much you can control your income during early retirement because it's all income-based.

It is not an annual opportunity.

Now, there are a few limited situations in which guaranteed issue rights may apply again, but those situations tend to be less common.

Another costly Medicare enrollment mistake involves individuals who are on COBRA after age 65 but have not enrolled in Medicare.

He joined the Gallagher team back in 2021.

While in law school, he spent nearly four years of his career as a regulatory compliance consultant, an experience that allowed him to develop a thorough understanding, this will be an alphabet soup, we'll learn more about it later, of ERISA, COBRA, healthcare reform, cafeteria plans, FSAs, HSAs, and other various tax laws related to healthcare benefits.

He executes on this knowledge with clients and acts as a sounding board for ideas and strategies for the entire Southeastern region for the Gallagher team.

He graduated from the University of South Florida in 2009 with a BA in behavioral science.

And then we can jump into that and the alphabet soup as well.

Um, so I guess the first thing, and we'll go back to this, but I feel like the first thing a lot of the guests will want to know is, you know, what does a benefits attorney focus on? And we'll go through more details on that.

And then once we know more about that, then we'll get into the alphabet soup, the ERISA, COBRA, HSA, FSA, section 125 cafeteria plan.

That doesn't mean you get food from the cafeteria, right? That just means that's a benefits thing.

Mm-hmm.

Often it'll be like, "I'm not retiring until 65 so I can get on Medicare," or 63 and a half so they can bridge their, uh, you know, employer-based insurance through COBRA for that year and a half to get them there without having to worry about what else they're gonna do for insurance.

Yeah.

But let's, let's put those aside.

There's really only a handful of options, unfortunately.

One is if you do have employer-sponsored coverage, not just a year and a half of COBRA you can get, but some places, this is not common anymore, but some places will let you continue that on, you know, into 65 through some-

Mm-hmm

... sort of retiree benefit, you know, extension of, of healthcare.

Then came efforts to repair particular gaps.

COBRA, enacted in 1986, allows qualifying people to continue job-based coverage temporarily after certain events, including losing a job.

But the person may have to pay the full premium, including the share the employer had previously paid, plus an administrative amount.

You've lost your paycheck.

And then he s- goes on with three questions, okay? The first one: "We are planning on my wife taking her Social Security at 62, which would be roughly 2,000 a month.

I want to retire at 64 and a half, which will allow us to COBRA until I am 65." So staying on his employer health insurance until 65.

He could actually do it, um, longer than that if he retired earlier, right? 'Cause COBRA maxes out at 18 months.

But he's planning-

Well, in this case

If he's...

I- if...

Because it says, "Which will allow us to COBRA until I'm 65," that 65 is him qualifying for Medicare.

Also, you're going to be faced with decisions around health insurance.

You're gonna be faced with the decision of whether or not you stay on the COBRA plan that your employer is, is required to offer you, or if you're gonna go out and you're gonna get your own health benefits.

And certainly, you can just default to the COBRA benefits that they offer you and start paying for them, but that doesn't mean that it's the most cost-effective option for you and your family.

There may be better options out there for you.

You need to take the time to review these things.

So these are the things that we help people with.

As, as the clients we work with are making these transitions, first and foremost, we help to empower action, and that is the action of simply doing these things.

It is meeting with a health insurance professional to weigh the options of buying an individual plan versus going on the COBRA plan.

So someone who has spent years building a retirement should not have to discover a health gap during the first month away from work, again, which is why I want you to be proactive here.

So Fidelity says that retiring before age 65 can require coordination among a spouse's plan, a Consolidated Omnibus Budget Reconciliation Act, that's COBRA, uh, the coverage for that, or marketplace insurance.

And again, I can help with that.

I do have a gentleman I work with that specializes in Medicare, uh, supplemental for Medicare.

And I stress the word active employment.

So COBRA coverage, a lot of people think, well, that's still my group plan.

That isn't through active employment.

So COBRA coverage isn't a good long-term solution for someone who's Medicare eligible.

But if your spouse is working and that group health plan makes more sense for your family as opposed to moving to Medicare, you can still delay that Part B enrollment.

Let's talk about people who retire before 65. big challenge that people think, you know, and I hear a lot of people say, I can't retire too early because I won't have health insurance.

So there are multiple insurance companies and multiple plans available in the Knoxville market through the marketplace to allow people to buy ACA qualified health insurance plans.

And if they want to check that out, tell us that website again.