Retiring Early to Travel?

Planning on retiring early to travel? There are some things you should know about your insurance options. 

COBRA

If you’ve had group health insurance through your employer, you may wish to continue it through COBRA. Yes, even if you are retiring early on your own volition, you will likely be eligible for COBRA. Your HR department should contact you with a notice of eligibility. 

COBRA will allow you to keep your exact same health insurance for a period of up to 18 months. So, it is really meant as a stop gap rather than a permanent solution. However, if you are retiring close to Medicare age, then perhaps you might want to consider it.

If you are interested in traveling, consider the PPO option offered by your employer. PPOs will offer you more flexibility in and out of network. You will not need a PCP or referrals for a specialist so if you are traveling and need medical care, this option would be much easier.

Remember, that during your COBRA enrollment period even if you were enrolled in an HMO before, if your employer offers a PPO, you can switch during that time.

The downside to COBRA is that it can be rather expensive. When your employer offers group health insurance they cover at least 50% of the premiums (sometimes more). That means if you elect to use COBRA, you can expect your premiums to at least double plus a possible 2.5% administrative fee. It’s not usually out #1 recommendation, but it can be appropriate in certain situations.

Marketplace

For many who are retiring early, marketplace insurance is a great option. Your eligibility for a premium tax credit is determined by your income, not your assets. So if you have retired early and are largely living off your savings, you will likely qualify for a large premium tax credit making your monthly premiums quite low (possibly even $0).

The downside to marketplace plans if you are interested in travel is that it is very difficult to find a plan with nationwide PPO coverage. If you are traveling throughout the United States frequently, this would really be your ideal plan. 

Now luckily, you will have coverage, even out of network, in a true medical emergency. So if you are out of your coverage area, but need to go the ER, you will have coverage. However, if you really are traveling constantly, your regular medical care would likely not be covered.

There are some plans that offer out of state non emergency benefits, so you can certainly look for one of these types of plans. You can also plan to return to home base for your regularly scheduled care.

Also, many doctors do telehealth! So, even if you are far away from home, you may be able to access your regular care via whatever portal your doctor uses. 

Short Term Medical

Short term medical plans may also be an option. These plans are a type of private health insurance usually offered for a period of up to three years. Because they are private insurance, you will likely have to undergo medical underwriting. So, pre existing conditions may not be covered in the first year of a multi-year plan or possibly not at all for more complicated conditions. 

These plans will off nationwide PPO coverage which is ideal for those wishing to travel.

International Travel Insurance 

If you are travelling abroad, you have the choice between short term and long term travel insurance. Your credit card may even offer some benefits.

Your insurance needs depend upon the length of your travels.  Short term travel insurance is for your average vacationer, not an expat or nomad looking to backpack across Europe for the better part of a year.  This type of insurance is really only going to cover medical emergencies.  For example:

• Emergency Medical Expenses i.e. a broken bone needing x-rays
• Emergency Dental i.e. a chipped tooth 
• Medical Evacuation i.e. airlifting after a major event
• Accidental death or dismemberment

You can choose between comprehensive travel insurance or a travel medical plan. You can even get multi-trip coverage.  

If you’re going to be away from home long term, you’ll need a different type of plan.  Obviously, you’ll need coverage for more than just medical emergencies.  These types of plans are known as travel major medical plans and are intended for people who will be travelling for more than six months.  

These types of plans are much more similar to traditional health insurance plans.  Because these are like traditional plans, they’ll be a little more expensive and offer more coverage.  You’ll need to be aware of things like:

Deductible & Premiums: 

Geographic Coverage- meaning you may not have the same level of coverage everywhere you travel. 

Benefits & Exclusions- you may find that your medical needs as a result of certain activities are excluded.  Usually these are high risk activities such as skydiving or rock climbing.