ACA & The New Normal

ACA Offers Options for Americans Planning for Retirement

New options for those seeking early retirement

November 04, 2015 — NEWARK, N.J.–(BUSINESS WIRE)–For Americans who are interested in retiring but continue to work full-time just to bridge their medical benefits to Medicare, the Affordable Care Act (ACA) offers new health insurance options.

By taking advantage of the health insurance options made available through the ACA, individuals can consider enhanced career flexibility later in life without having to worry about their health insurance in the same way as prior generations of early retirees, according to a new Prudential Financial, Inc. (NYSE:PRU) white paper, “Early Retirement and the Affordable Care Act.” While many groups will benefit from the ACA, those who have left full-time jobs and are under age 65 may have the most to gain. At age 65, most Americans become eligible for Medicare.

“Many people stay in a job longer than they’d like just to keep the health insurance,” said Rodney Allain, head of Sales and Distribution for Prudential Annuities. “Individuals may now be able to retire early, work part-time or move on to a new career knowing there are more affordable healthcare coverage options available than just a few years ago.”

A Bridge to Medicare

Allain said the primary reason people are in search for a bridge to Medicare is the changing retirement picture in the United States. He said most Americans are now retiring in stages, rather than abruptly at the age of 65 or 66, moving into part-time jobs or becoming self-employed. The factors contributing to this trend include:

  • Lack of retirement savings
    The Center for Retirement Research at Boston College has found more than 50 percent of Americans do not have enough money to maintain their pre-retirement lifestyle in retirement.
  • Defined benefit plans are disappearing
    Traditional defined benefit plans have become less common, so fewer and fewer people are retiring at 65 to collect a pension and the retiree healthcare benefits that often went along with it. With 401(k) plans now the principal retirement savings vehicle, individuals can be flexible in drawing down their savings, but often don’t have access to employer-provided retiree health insurance.
  • The ‘semi-retirement’ trend
    Many individuals may want to move on to new part-time or full-time jobs, but can’t for fear of losing their health insurance. Bridge jobs or ‘semi-retirement’ is increasing in popularity among the American workforce as these options provide greater flexibility and can require fewer hours.
Individuals may now be able to retire early, work part-time or move on to a new career knowing there are more affordable healthcare coverage options available than just a few years ago

“The guidelines in the ACA include a number of provisions aimed at making health insurance more accessible and affordable,” said Jim Mahaney, vice president of Strategic Initiatives for Prudential. “There’s no need to worry any longer over dangerous gaps in coverage or being turned down for coverage due to a pre-existing condition.”

Mahaney said early retirees can also benefit from provisions that limit the amount older individuals can be charged and prohibit insurers from charging women more than men.

“The ACA also provides subsidies and tax credits for lower income individuals,” he said. “This could prove particularly valuable for early retirees, who may have less taxable income than when they were employed in a full-time job and can often control the amount of taxable income they take during the years just prior to turning 65 and becoming Medicare eligible.”

Mahaney said people can purchase ACA coverage through Health Insurance Exchanges, known as Marketplaces, directly from a health insurance company, from an agent or broker, or from an online seller. The cost will depend on the type of plan, with each plan designed to pay, on average, a range between 60 percent to 90 percent of covered expenses. A catastrophic plan can be purchased for much less, but these have very high deductibles and, for early retirees, are only available to those who qualify for a hardship exemption.

“If you are thinking of retiring prior to age 65, you should review your health insurance options at the government’s website,” he said.



Prudential Financial, Inc. (NYSE:PRU), a financial services leader with more than $1 trillion of assets under management as of June 30, 2015, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit