You've met your goals of having a successful career, taking care of the kids and building a nice nest egg. Can you retire early? Maybe, but what about health insurance?

Social Security and Medicare benefits kick in at age 65, but maybe you want to leave the workforce before then. You may see the benefits of retiring earlier and healthier. But you may find it hard to fill a gap in health insurance coverage before you become eligible for Medicare.

The availability and cost of health insurance may factor into whether you can retire early. What are your coverage options?

Taking advantage of a spouse's coverage
If you are married and your spouse plans to keep working, you can likely be covered under a policy through his or her employer. That is probably your least expensive option.

Using your company's retiree health benefits
Employers have cut back on retirement benefits over the past 15 years or so. Most employers that still offer retiree health benefits require you to pay more for them. Often, this means that you will pay 100 percent of a policy premium. This option costs more than when you were an employee, when your company may have paid part of the premium. But the rate may still be less than a policy on the open market.

Extending your current coverage under COBRA laws
Retirees may be able to keep their group health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) law. The law lets you continue coverage with your former employer's plan for up to 18 months after you leave work. Certain dependents, spouses and ex-spouses may also be covered.

You can extend your insurance through COBRA for 18 months. If you retire at 63 1/2, COBRA will last until you are eligible for Medicare. COBRA coverage starts on the date that your policy would have ended.

Under COBRA laws, employers may charge up to 102 percent of the total policy premium. Still, monthly payments are often less than you would pay on the open market.

Retirees benefit from COBRA laws that guarantee former employees coverage regardless of health status.

If you have a disability, you can extend the 18-month coverage period for 11 more months. But the insurance plan is allowed to charge up to 150 percent of the premium during this extension.

Checking your professional affiliations
Some professional or recreational associations offer group health insurance. Some states allow groups to offer health insurance to members.

Buying insurance on the open market
Buying individual health insurance is usually the most expensive option. It is also the hardest to get. Many aging adults who have pre-existing conditions may not be offered coverage.

When faced with this dilemma, you may have to consider one last option ....

Working part-time
Think about working a part-time job that offers benefits, even if it's at a lower salary. This can fill the gap until you are eligible for Medicare.

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External Sources U.S. Department of Labor, Bureau of Labor Statistics. Retiree health care benefits: data collection issues. . Accessed March 06, 2008 U.S. Social Security Administration. The erosion of retiree health benefits and retirement behavior: implications for the disability insurance program. . Accessed March 06, 2008 U.S. Department of Health and Human Services. Centers for Medicare & Medicaid Services. Medicare & you 2008. . Accessed March 06, 2008 U.S. Department of Labor. FAQs about COBRA continuation health coverage. . Accessed March 06, 2008 U.S. Social Security Administration. Medicare. . Accessed March 07, 2008 U.S. Department of Health and Human Services. Medicare eligibility tool. . Accessed March 06, 2008

This article was reviewed and updated 08-01-2009.