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Looking to retire early? Don't forget about health insurance

Many, many people dream of retiring early from their jobs. They have crunched their numbers and think they can make things work financially, but very often they fail to consider one important factor -- health insurance.

While you are working, your employer pays all or at least the majority of the cost of health insurance. In years past, companies would often offer retiree health coverage but that has changed dramatically in the past decade or so. According to a study by the Kaiser Family Foundation, in 1988, 66 percent of large employers offered company health insurance coverage to employees who retired early. By 2010, that number had dropped to just 28 percent.

So what options are available to workers who want to retire early but find that they don't have access to their company's health insurance? The most common solution is to get coverage under a spouse's policy. However, if you and your spouse are both retiring, that option won't be available and you will likely have to look at COBRA.

Under COBRA, you can continue health insurance coverage under your former employer's plan for 18 months. You will need to pay 100 percent of the coverage cost plus an administrative charge of up to 2 percent, but you can be assured of having coverage unless your former employer closes its doors or goes bankrupt.

If COBRA coverage is too expensive, or you are more than 18 months away from qualifying for Medicare, you will need to look into other forms of group coverage or you will need to purchase your own individual policy. One place you might want to look to for a group policy is your college or university's alumni association. Lots of colleges offer these types of policies but they may be restricted in certain states. Similarly, many professional societies also offer attractive plans.

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