Here’s a rundown on the changes of keenest interest to insurance advisors...
Health insurance has long been one of the biggest obstacles to early retirement, but the Affordable Care Act may solve that, U.S. retirement experts say.
The Employee Benefit Research Institute says only 18 percent of current private-sector workers are eligible for pre-65 retiree health insurance benefits, versus 29 percent in 1997, Money Magazine reported.
In 2013 and before, employees who wanted to retire early had few options for health insurance if an employer didn't provide health insurance. They had to buy an individual plan, which are more expensive for those in their 50s and 60s and if the person had diabetes or heart disease, this type of pre-existing condition could leave them uninsurable, the EBRI says. For example, a bare-bones policy might carry a $10,000 deductible or omit prescription-drug coverage.
Recently, a Center for Retirement Research study found the reason most people chose to retire at age 65 was due in large part to Medicare eligibility at age 65.
"The insurance market is pretty scary for early retirees right now," Karen Pollitz, a senior fellow at the Kaiser Family Foundation, told Money magazine. "It won't be so scary anymore."
In 2014 under the Affordable Care Act, a 60-year-old can no longer be charged more than three times what a 20-year-old pays, down from today's typical 5-to-1 ratio. In 2014, any 50-something or 60-something can buy his or her health insurance in a Marketplace whether they are working or retired.
In addition, about half of those buying via the Marketplace will qualify for a subsidy, which is based on income. An early retiree with a high premium has a good chance of qualifying for a tax break, especially if the retiree will live on less than when they were employed.
For example, a 60-year-old couple making $62,000 a year in retirement would qualify for a subsidy that would bring a $1,140 monthly insurance premium down to $491, the Kaiser Family Foundation subsidy calculator -- at kff.org -- calculated. For a single person, the annual income cutoff to qualify for a subsidy is $45,000; for a family of four, it's $94,000, Money magazine said.
The Affordable Care Act made a difference for 62-year-old Sheri Pyle, who retired to Tennessee last year with her husband, Bill, who retired from a Chicago heating and plumbing firm.
Bill Pyle, age 65, qualifies for Medicare, but Sheri Pyle, who has arthritis, worried about her insurance costs once her former employer's $400-a-month COBRA coverage ends in December.
On the Tennessee Marketplace Pyle found her monthly premium would run $593 a month for a mid-level plan, but she will qualify for a subsidy that will knock her monthly premium down to $345 a month, the magazine said.