In Part I of this series, we discussed options for healthcare insurance coverage for those who choose to retire before age 65 when people qualify for Medicare coverage. We discussed the first two of four options mentioned in an article by Gail Marks Jarvis published in The Wall Street Journal.

The first two options were Employer coverage and ACA (ObamaCare) coverage. Today we’ll discuss two more options; Private coverage and Last Resort options.

Private Coverage

Early retirees who don’t qualify for a subsidy can still buy private insurance through the ACA marketplace, and it is smart to do so even though it will cost full price and is likely more expensive than non-ACA private insurance, says St. Petersburg, Fla., insurance agent Peter Motzenbecker.

That is because there are few private plans available anymore outside the ACA system, and those that remain often don’t have the pre-existing condition coverage provisions that ACA plans do. In other words: ACA plans don’t screen people for their health before insuring them. And whenever people are insured through the ACA marketplace, they will be covered even if an illness stems from a past condition. Private plans frequently deny coverage if they determine a person’s malady stemmed from a condition that existed before they bought insurance.

The denial-of-care risk also applies to private plans that last for only a few months, says Christine Simone, chief executive of Caribou, a firm that helps financial planners compare health plans. Such plans are called “short-term” or “skinny” policies, and people sometimes buy them when they lose a job and need insurance for just a few months before taking a new job or going on Medicare.

Short-term plans are far less expensive than Cobra coverage as a stopgap for someone who leaves the workforce unexpectedly, Simone says, but she calls them “a gamble.” Although you have to pass a health screening to qualify for a short-term plan, a provider could refuse coverage for a condition by deeming it pre-existing.

Depending on the short-term plan, there can also be caps on coverage, such as $1,000 for a hospital stay. That can leave an individual short of what will be needed if, for example, he or she has a heart attack and has to be hospitalized at a cost that can easily be in the tens of thousands of dollars.

“It’s a misconception that private insurance outside the [ACA] exchange is better,” says Chumbley Hogue, the Dallas health-insurance agent.

Last Resorts

Another route to reduce coverage costs for those who have lost their job for health reasons could be through a Social Security disability designation. Such a designation would allow a person to get Medicare coverage before age 65, but Chumbley Hogue warns that the process can take months and Medicare often doesn’t start until 24 months after a person is deemed disabled.

One other alternative advisers suggest is to find work at a business that provides health insurance to part-time workers. Such companies include Starbucks and Trader Joe’s, according to career website Indeed.com. Given employers’ typical contributions to health insurance, an individual working part time for a large company might have to pay about $119 a month for health insurance, according to Kaiser Family Foundation Vice President Cynthia Cox.

All of this information should make you think twice before retiring before age 65. Your health is critical to the enjoyment of your retirement, so don’t take it for granted. Make sure you know in advance where you’re going to get your healthcare insurance and what it will cost. That’s a crucial part of your retirement plan.

All of this information should make you think twice before retiring before age 65. Your health is critical to the enjoyment of your retirement, so don’t take it for granted. Make sure you know in advance where you’re going to get your healthcare insurance and what it will cost. That’s a crucial part of your retirement plan.

More and more people are retiring before age 65, which creates certain problems for healthcare insurance coverage. Most retirees can count on Medicare to pick up most of the tab for their retirement healthcare, but what if you’re too young to qualify?

Gail Marks Jarvis, writing for The Wall Street Journal, offers us a reality check. “For a couple, premiums for coverage can run from $1,700 to $2,200 a month depending on where they live, their age and the source of the insurance. And besides premiums, there are deductibles, copays and prescriptions and coinsurance costs—potentially adding thousands of dollars more in extra costs. The upshot: Leaving work just four years before starting Medicare at age 65 can easily drain $100,000 or more from retirement savings.”

What’s more, some insurance options have a limited local network and might not include preferred doctors or allow participants to see a specialist without a referral. And many don’t cover expenses incurred out of state unless it is an emergency, a potential deal breaker for a retiree who wants to spend winters in a warmer climate.

 It’s easy to think you’ll have the same quality healthcare insurance coverage after you retire, but such is often not the case. Planning is needed to address this important issue before your last day of work. What are some options to consider?

Options

• Employer coverage
• ACA coverage
• Private coverage
• Last resorts

Employer Coverage

The cheapest option for a couple is to stagger retirements and have one keep working so both can rely on a workplace plan until Medicare becomes an option at 65. Workplace plans tend to be subsidized, with the employer paying about 83% of the cost of coverage for the employee on average, according to the Kaiser Family Foundation. For family coverage, the employee must pick up an additional share of the expense.

But that approach isn’t always feasible if you’re single or if neither partner wants to delay retirement. So another way to stay on a workplace plan and stay retired is through so-called Cobra coverage, which allows workers at many companies the right to continue health benefits for as many as 18 months if they leave their job under certain circumstances such as voluntary or involuntary job loss, reduction in hours worked or other life events.

Cobra coverage will cost more than if you are employed, with many employers requiring such plan participants to pay full fare, plus a 2% administration fee. However, the Cobra option will allow you to keep your preferred doctors as you consider what to do next. The average Cobra premium for a family recently ran about $25,000 a year, including the 2% fee, according to the Kaiser Family Foundation. That compares with an average of $6,775 a year the employee was accustomed to paying through paycheck deductions.

ACA Coverage

While using Cobra may be a good stopgap, moving to insurance through the Affordable Care Act marketplace is usually far less expensive because most people qualify for subsidies thanks to recent regulatory changes by the Biden administration to guide more people onto the program. Even people with more than $200,000 in income qualify in some parts of the country, and income typically plunges after leaving a job.

The ACA program includes four tiers of coverage: platinum, gold, silver and bronze. The bronze plans have the lowest premiums, silver next, then gold and platinum. Financial planners sometimes say silver is the best value, but that isn’t always the case once all potential out-of-pocket costs are compared, says Chumbley Hogue. Subsidies can be examined with the Kaiser Health Insurance Marketplace Calculator.

 Nationally, the average 63-year-old couple with a $150,000 income would get a $13,689 subsidy to significantly reduce the $26,439 premium on a silver plan. Subsidies vary by location and income. A family of four with an income up to $45,000 wouldn’t have to pay a premium for a silver plan. In New York City, a 63-year-old couple with an income of $250,000 could qualify for a small subsidy to reduce their premium.

Beyond cost considerations, ACA plans are more user-friendly than other private options because they won’t disallow coverage based on pre-existing conditions and can’t deny coverage or boot policyholders if they become sick after buying the insurance. Still, retirees who choose this route aren’t home-free after paying premiums. The plans have deductibles and other requirements like copays and coinsurance for doctors, hospitals and prescriptions. Furthermore, you may not have access to the best doctors and hospitals who don’t participate in the ACA program.

(Note: More on options to consider next post.)

In Part I of this series, we learned that there is a new cancer screening test that has shown the ability to detect cancers earlier than possible before, which has led to more effective treatment. Roger Royse, a lawyer in California, had the test which detected early pancreatic cancer, which is usually detected late when it is routinely fatal. But because his cancer was detected early, he had successful treatment and is now cancer free.

Allysia Finley, writing in The Wall Street Journal, tells us this happy ending was only made possible, however, because Mr. Royse was willing to pay for the test out of his own pocket, because insurance wouldn’t pay for it. Which leads to the obvious question, why not?

The test is relatively expensive at $949, but this is cheap compared to other tests that are routinely done, like MRI scans, which usually cost thousands. The test, called Galleri, is produced by a company called Grail.

Grail’s test has a roughly 0.5% false-positive rate, meaning 1 in 200 patients who don’t have cancer will get a positive signal. Its positive predictive value is 43%, so that of every 100 patients with a positive signal, 43 actually have cancer. That may sound low, but the positive predictive value for some recommended cancer screenings is far lower. Fewer than 1 in 10 women with an abnormal finding on a mammogram are diagnosed with breast cancer.

Because Grail uses machine learning to detect DNA-methylation cancer linkages, the Grail test’s accuracy should improve as more tests and patient data are collected. Dr. Ofman says the company also aims to reduce the test’s cost by scaling up manufacturing and detecting cancers with less genetic sequencing.

But therein lies a chicken-and-egg problem. Patient access is limited by Galleri’s lack of Food and Drug Administration approval and insurance coverage. These could help reduce the test’s costs and improve its accuracy. But regulators may balk at approving the test, and insurers at covering it, until it becomes cheaper and more reliable.

Regulators classify Galleri as a lab-developed test. Such tests are overseen by the Centers for Medicare and Medicaid Services and can be prescribed without FDA approval. This regulatory pathway allows hospitals, research centers and startups to develop tests without running the FDA’s bureaucratic gantlet. Since diagnostic tests can’t injure patients, no safety review is necessary.

The FDA in October proposed regulating lab-developed tests as medical devices, which generally require agency approval. That could severely curtail patient access and slow test development since the FDA doesn’t have the personnel to evaluate the tens of thousands of lab-developed tests on the market. The rule’s public comment period closed on Dec. 4.

Finley says, “Requiring randomized controlled trials and FDA approval for multicancer early-detection tests could restrict access for years. Hundreds of thousands of patients would likely have to be enrolled in trials, some receiving the test with the others in a control group. They would have to be followed over many years to determine whether patients who received the test were diagnosed with specific cancers earlier than those in the control group and how much longer they lived as a result. Proving a statistically significant benefit could take a decade or longer.”

One alternative is to rely on real-world studies, which Grail is already doing. One study of patients 50 and older without signs of cancer showed that the test doubled the number of cancers detected. The FDA could also approve the test, and CMS could provide Medicare coverage, on the condition that providers collect patient data that can be used to analyze the benefits.

Dana Goldman, the University of Southern California’s dean of public policy, likes that idea: “There will be a lot of suffering if we have to wait 10 years for the tests to be approved.” Mr. Goldman has spent decades studying the economics of medical treatments. One recurring problem he has seen: “Epidemiologists are always getting cancer wrong,” he says. “Epidemiologists a decade ago said U.S. overtreats cancers. Well, no, the EU undertreats cancer.”

A 2012 study that he co-authored found that the higher U.S. spending on cancer care relative to Europe between 1983 and 1999 resulted in significantly higher survival rates for American patients than for those in Europe. By his study’s calculation, U.S. spending on cancer treatments during that period resulted in $556 billion in net benefits owing to reduced mortality.

He expects Galleri and other multicancer early-detection tests to reduce deaths and produce public-health and economic benefits that exceed their monetary costs. Cancers caught early are cheaper to treat—less likely to require a cocktail of expensive therapies, and in some cases removable without the need for chemotherapy.

Let’s hope this test is approved by private insurance and Medicare soon. We need all the early detection cancer screening tests we can get!