One of the most expensive propositions facing early retirees is the cost of health insurance until medicare kicks in at age 65.  For traditional health insurance companies the age band from 60 through 64 carries the highest premiums, even for those in good health, while those in poor health may be denied coverage and have to resort to state HIPAA plans where premiums could exceed $3,000 per month.  There is an alternative, however.   Certain indemnity insurance carriers offer guaranteed issue health insurance with fixed, reasonable premiums.

Indemnity insurance differs from traditional major medical in that the insurance company pays a defined dollar amount for each procedure, period.  For example, let's say for a doctor's office visit the defined amount is $100.  If the insurance comany offers a preferred provider network (PPO) a visit to a participating doctor may cost $80, where a non-participating doctor might charge $130.  In either case the insurance company pays $100---in the first scenario you receive $20 from them and in the second case they pay the doctor the $100 and you pay the doctor $30.  This approach will certainly encourage you to shop around.

Similarly, in the case of hospitalization you may receive a first day benefit (ie:  $3,000) and a daily benefit (ie: $1,500), which means that for the first day you would have $4,500 to spend---indemnity benefits can be additive.  There is usually a surgical schedule (ie:  100% of medicare allowed) and a seperate anesthesiology schedule. Again, making use of participating network providers would be most prudent in such cases.

A guaranteed issue indemnity insurance policy may not be for everybody but might well be suited for certain early retirees, especially those facing what could be daunting health care costs while they await their medicare eligibility.