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Don't Retire Without Health Coverage to Age 65

Retirement planning usually focuses on "the number"—how much money you'll need to support the kind of life you want. For early retirees, there's a second question, potentially even more important: will you have health insurance to carry you to 65 when you finally come under the protection of Medicare? Without it, your health, savings and standard of living are at serious risk.

It's dangerous to go uninsured, as all too many Americans know. A study published in The New England Journal of Medicine evaluated adults who were 51 to 61 in 1992. Those without policies were almost three times as likely to suffer a decline in health in the following five years as those who were lucky enough to have continuous coverage.

Going without insurance is also dangerous to your financial health. Bankruptcies are soaring among older people. "It's often a one-two punch—high medical bills and job loss," says Elizabeth Warren, a professor at Harvard Law School and a bankruptcy expert.

If you have a choice, don't even think of retiring until you know you can fill the insurance gap. Some places to look:

f your spouse is still working, you can go on his or her plan. Don't miss the deadline. You have a limited number of days after your retirement for signing up.

Look for a job with benefits. Possibilities include hospital work, teaching and other government jobs. Some plans cover part-timers, including those at companies such as Costco, Wal-Mart and Home Depot.

COBRA benefits let you stay in your company plan for 18 months,although at a high cost—averaging $4,500 a year for an individual and $12,000 for a family.

For individual policies, work with a health-insurance agent (you'll find names at nahu.org). The coverage won't be as good as you had in your company group plan. For something affordable, you may have to take a $2,500 or $5,000 annual deductible, per person, plus copays for double that amount. Health problems will raise your rates even further or bounce you into a high-risk pool.

Even policies with deductibles as high as $10,000 are worth it, however, because they put you into the PPO network. That gives you a discount of up to 50 percent on the bills you pay yourself.

Your premiums will rise every year, based on medical inflation, your age and your health. If you get sick and have a lot of claims, you'll pay more than if you'd had a good year. The policy gets harder to pay for just when you need it the most.

If you already have a policy, don't move to another city or state until you find out whether you can take it with you. An HMO is good only at its own facilities. A PPO in a retiree plan might be portable, although your premiums and copays will probably change, says Aetna spokesperson Ethan Slavin. Ask your employer about it. With an individual policy, it depends on which insurance company you choose. Some let you transfer it to another state while others don't. Moving is risky if you have to qualify for health insurance all over again.

If you move, settle in with a doctor before you're 65, says Scott Leavitt, president of the National Association of Health Underwriters. Some docs don't take new patients if their only insurance is Medicare. It takes medical security to live your dream.