Health Insurance Solutions for 60+ Year Olds Not Ready For Medicare

What You Need to Know

Some older adults will qualify for subsidies based on their income, making  ACA-compliant health insurance coverage more affordable.

COBRA is expensive, but may make sense if you’re in the middle of treatment, are close to meeting your deductible, or otherwise don’t want to change networks or providers.

Consider enrolling in short-term health insurance or fixed benefit medical if other options aren’t right for you and you need to bridge the coverage gap until you’re eligible for a Medicare plan.

Editor’s Note: Reviewed in December 2023 to update citation sources and ensure compliance standards

If you’re in your early 60s and not yet old enough to qualify for Original Medicare at 65 or disability coverage — you may be wondering what your choices are for health insurance. 

The good news is that you have a number of options. That said, there are also some challenges since individual health insurance expenses go up as we get older. In recent years, many older individuals have struggled with these rising costs; a 2023 analysis found that a retired couple at age 65 will need approximately $315,000 after taxes to pay for health care for the rest of their lifetime.

However, it is possible to get adequate coverage without spending a lot on monthly premiums and other costs. Your options include:

• Non-government insurance plan (through your employer or purchased on your own)
• COBRA
• Affordable Care Act (Obamacare) plans
• Short-term health insurance 
• Fixed benefit indemnity plans

By weighing the pros and cons of each option as you consider your own health and financial situation, you can find a plan that’s right for you until you’re able to enroll in a Medicare plan.

How Has the ACA Affected Health Insurance for Older Adults?

Under the Affordable Care Act (ACA), a health insurance company cannot refuse to cover a person or charge them more because they have a preexisting condition, meaning a health issue that existed before the start date of new healthcare coverage.

The ACA also says that older people who enroll in individual and small group health insurance plans can’t be charged more than three times the rate that applies to a younger adult (someone in their twenties). Before the ACA was enacted, this wasn’t regulated at all in many states, and the rate was often nearly five times what a younger person would pay.

The flip side of this is that the passage of the ACA has contributed to rising health insurance rates for older Americans. No longer able to reject applicants with preexisting conditions or charge them higher premiums, insurance companies rates have risen since the launch of the ACA.

How Do Premium Subsidies Affect Health Insurance for Older Adults?

If you qualify based on your income, you could get help to pay for your monthly premium for an ACA plan you buy through the federal or state Health Insurance Marketplace. These are called premium subsidies and can make an otherwise expensive plan one you can afford. 

Thanks to the Inflation Reduction Act, financial assistance for health insurance has been expanded. Individuals with health insurance premiums that cost more than 8.5% of their total household income are eligible for a financial subsidy on their health insurance through 2025.

How Does Self-Employment Affect Health Insurance for Older Adults?

Self-employment rates are highest among those age 60 or older, so a good number of these individuals find themselves without health insurance through a job and need to buy other coverage. In fact, 1 in 4 individuals over the age of 60 are in fact, self-employed.

When Does COBRA Make Sense?

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, lets employees who’ve left their job for any reason except gross misconduct, or those who’ve had a reduction in their work hours, continue with the group healthcare coverage they had through their employer, as long as that plan is covered by COBRA. 

An employee and family members can continue with their current healthcare coverage for a limited time, usually 18 months, but 36 months in some cases. 

COBRA premiums are usually high (102%) because you will probably have to pay the entire cost of the insurance policy yourself, plus an administrative fee. For that reason alone, many people don’t choose COBRA coverage because it’s simply too expensive.

That said, there are some situations when it may make sense for you to pay for COBRA. For example, if you or one of your dependents is close to meeting the deductible, or undergoing treatment for a medical problem and you don’t want to switch to a new provider network and new physicians, you may want to stick with your current coverage and pay the COBRA premiums. Also, COBRA could be an option for those within 18 months of turning age 65 as you’re waiting for Medicare eligibility.

When Does an Obamacare (Affordable Care Act) Plan Make Sense?

While Obamacare can be costly for older adults who have to pay full price, for those who qualify for premium subsidies, it can be a very good choice. 

All ACA plans cover people with preexisting conditions and include 10 “essential health benefits,” including preventive care, emergency services, hospitalization, lab services and more. So, if you need more care, you’re likely to save money in the end by choosing a plan that covers all the types of care and medication you need to get or stay well.

When Does Short-Term Medical Insurance Make Sense?

If you don’t qualify for premium subsidies and can’t afford an ACA plan, short-term medical insurance can be another alternative. These temporary plans are, by definition, of limited duration, usually lasting a few months up to a year. Depending on where you live, you may be able to renew your policy to get longer coverage.

There are pros and cons to short-term medical insurance: These plans don’t cover preexisting conditions or all of the essential health benefits that ACA plans do. Your medical history can affect coverage, and these policies limit how much they pay in benefits. 

However, short-term plans can be less expensive than ACA plans, and you can purchase one at any time (no need to wait for the Open Enrollment Period), with coverage effective as early as the day after you apply. 

Short-term medical insurance can be a good choice if you don’t have any significant preexisting conditions or chronic conditions that require regular visits to your provider(s) and/or prescription medication.

When Does Fixed Benefit Indemnity Make Sense?

Older adults who are self-employed and can’t afford the high deductible of their ACA plan, or can’t afford an individual ACA marketplace plan altogether may want to consider a fixed benefit indemnity plan. An fixed indemnity plan provides set financial benefits for medical services without having to meet a deductible. For example, a policy might provide a “fixed” benefit of $200 for a doctor office visit. Even if the doctor visit is $250, the policyholder receives $200 to help pay for the expense no matter what provider they see.

Like short-term medical plans, fixed benefit indemnity health plans don’t have to offer all of the ACA’s essential health benefits. These plans can adjust premiums based on age and gender — none of which is permitted for policies sold on the Health Insurance Marketplace.

Next Steps

As you approach your 65th birthday and the chance to enroll in Medicare coverage, you may still need reliable insurance for all your healthcare needs. Because ACA plans can be costly if you don’t qualify for premium subsidies, some older adults opt for an alternative like short-term medical insurance for temporary coverage until Medicare, or a fixed medical indemnity plan to help reduce overall out-of-pocket costs for healthcare services.

When you’re ready to move ahead, take the time to carefully consider the pros and cons of each option in light of your particular situation, meaning your health and that of anyone else the policy will cover and what your budget can afford.

When you’ve narrowed down your choices, be sure to read all of the exclusions (what’s not covered), get a clear understanding of your benefits and all out-of-pocket costs aside from premiums, and, if you need more help, talk to a health insurance agent for guidance.