Americans have a list of important ages. At 16, it's time for adriver's license in most states. At 18, it's time to register tovote. At 21, people can buy alcohol. At 25, auto insurance usuallygets cheaper. The next watershed date in a person's life after thatis probably age 65—the minimum age most people sign up forMedicare.  

Thanks to Medicare, millions of American seniors have access tohealth care. And while the program seems to go through an annualgame of political pingpong every time Democrats and Republicansspar over the budget on Capitol Hill, Medicare is a vital part ofthe American social safety net. 

Let's say an employee starts saving for his golden years earlyin his career. He makes wise financial choices. He lives within hismeans and gets a little lucky along the way. Then, he just might bein a position to retire before (or at) that watershed age of65. 

For many, that's the goal. But it also means millions of earlyretirees will face some tough decisions when it comes to paying fortheir health care. A 2010 AARP study says that more than 58 millionAmerican adults—roughly 19 percent of the population—are in their50s and early 60s. The aging of the baby boomers will add another4.5 million to this age group by2015. 

Known as “pre-retirees,” people who retire between ages 50 and64 face a limited set of health care options after they work theirlast day. A select number of pre-retirees retain benefits throughtheir employers. Other pre-retirees will have to start shopping foran individual plan, while others might have access to anotherprovider based on the sector in which they work. Some folks evenstay in their jobs until they can qualify for Medicare. And, ofcourse, the Patient Protection and Affordable Care Act will have animpact on pre-retirees as state and federal governments enact thelaw's provisions during the next few years. 

“Some become uninsured, but some people just stay working sothey can keep the insurance,” says Gerry Smolka, a senior strategicpolicy advisor for the AARP's Public PolicyInstitute. “If you care about being insured—which people atolder ages do care about—then they need to figure out what they'regoing to do before they leave the workforce.”

Employer plans

Pre-retirees can't depend on employer plans to help with healthinsurance. The number of large employers offering retirement healthcare benefits has declined over the past 30 years. Smalleremployers almost never offer retiree health care as a benefit and,according to AARP findings, no business formed in the past 20 yearsoffers retiree benefits. 

It's easy to see why employers don't offer pre-retirees benefitsany more. It's expensive. And with the ever-increasing cost ofhealth care in the United States, companies are looking for any wayto lessen the effect of health care costs on the bottomline. 

One of the first places a pre-retiree looks for health insuranceis at a spouse's or partner's private insurance plan. While itmight increase premiums for the spouse, it's often much cheaperthan paying the entire cost of an individual plan. 

Another pre-retiree strategy is to take advantage of COBRA,which allows employees to stay on an employer's group plan afterthey leave a job. If a worker retires within 18 months of turning65, he might be eligible to pay for COBRA until he qualifies forMedicare. 

Some employees—mainly those who work in the public sector—haveaccess to  state programs that allow retirees to retainhealth-care benefits after retirement. These programs usually areoffered to employees working in government-related areas includinglaw enforcement, first response, higher education or city, countyor state administration.

The New Mexico RetireeHealth Care Authority is one example. Pre-retirees make upabout 40 percent of the authority's 19,000 members. New Mexicopublic-sector workers pay a contribution as a benefit throughouttheir career and make payments into the system once they retire.About 75 percent of New Mexico public employees take part in theauthority's program. By signing up with the authority, employeesshield themselves from paying for an individual plan. 

“It's a scary world out there, and there are some scary numbersfloating around,” says Mark Tyndall, executive director of theauthority. “We're part of a larger collective, so it's good to bein a bigger boat.”

Individual plans

Millions of pre-retirees who opt to purchase individual healthplans suffer from a bit of sticker shock. For starters, an employerno longer pays part or all of the monthly premiums—pre-retireesfoot the entire bill. 

Most individual health insurance companies will qualifypre-retirees for their plans—from large companies such as Aetna,Humana and Blue Cross/Blue Shield all the way down to local healthinsurance companies that are only active in a single state. Someeven have special offerings for pre-retirees. For instance, theAARP offers its members a health insurance plan with Aetna calledAARP Essential Premier Health Insurance. The age groupfor the plan? Individuals age 50–64¾. 

But individual plans are expensive. Pre-retirees with chronicconditions should expect to pay hundreds more dollars per month fortheir plan. And that's if the health insurance company extendscoverage. 

Within plans, pre-retirees can offset the cost of individualhealth insurance by paying higher deductibles and saving on monthlypremiums. But it's a balancing act. Most plans will cover certainconditions or prescriptions differently. 

John Gaglione, owner of GBSA Insurance Inc.in Aurora, Ill., works with a number of pre-retirees and staysabreast of the health insurance options available in his state sohe can present his clients with a number of options.  

“Typically, I try to determine what they're looking for,”Gaglione says. “Usually someone comes to me and I can say 'I cantake a higher deductible' I can usually narrow the choices down.The fact is, this industry is so highly regulated, most of thecarriers are what are what you call the familiar brands like Aetna,Humana and Blue Cross Blue Shield. Frankly, they're all prettygood, but the devil is in the details. You have to find out whatthe limitations are and let (clients) choose.”

Staying healthy

Most pre-retirees need to keep their health insurance going.There aren't many people ages 50–64 without some sort of medicalcondition. Industry sources say the most common conditions they seein pre-retirees are high cholesterol, high blood pressure, diabetesand acid reflux. 

“They're pretty active—we're talking about the baby boomergeneration,” says Wayne Sackamoto, president of Health InsuranceInteractive in Naples, Fla. He says though for the most part,they're pretty healthy, most still take a couple ofmedications. 

Most industry insiders say PPACA is going to have an impact onpre-retirees. For one, there will be no more denials based onpre-existing conditions. While the act means everyone will be ableto get health insurance, it also means health insurance will costmore. 

“Everyone will be able to get it,” Gaglione says. “But willeveryone be able to afford it?” 

Nathan Solheim is a Denver-based writer. He can be reachedat [email protected].