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If you're younger than 65 when you retire, what should you do for insurance? Once again, it depends on your particular situation. We'll provide some general answers in this lesson, but it's definitely an area you'll have to check out for yourself and tailor to your individual needs

While working, you'll typically enjoy medical and health insurance coverage through a group policy from your employer. Many employers will allow you to carry that coverage into retirement. Some will even pay part or all of the cost. Most won't. That means you may have to pay the entire premium, something few of us do while working. Is the cost worth it? In general, the answer is an emphatic yes. A group policy is almost always far cheaper than an individual policy providing the same coverage. So, for those who retire prior to Medicare eligibility at age 65, a group policy is probably the best route to go if your employer allows you to keep that coverage when you leave your job.

But what if your employer is one of the many who will not let you continue your group medical insurance after you leave the job? What if they are, in short, cheapskates? Are you out of luck? No, not entirely. The government has given you some breathing room by mandating your right to remain insured under your employer's policy for a period of time. Called COBRA (no, not the snake, but shorthand for the Consolidated Omnibus Budget Reconciliation Act of 1985), the law provides for continued coverage when you leave your job for reasons other than gross misconduct.

COBRA says you are guaranteed the right to continue your former employer's group plan as individual or family healthcare coverage for up to 18 months, at your own expense. In certain instances, spouses and dependents may continue coverage for up to 36 months. You must pay the employer's cost for such coverage, and the employer may, and probably will, charge you an extra 2% for administrative expenses. Be aware that the cost of this coverage can be in the hundreds of dollars a month for both families and single persons. Therefore, it's an issue you must verify with your employer prior to leaving that job.

COBRA medical insurance coverage, though, does end after a fixed time. In the absence of Medicare, or of Medicaid (a welfare program for the needy), our only option is then an individual or family policy. An individual policy is usually enormously expensive compared to what you're probably used to paying. To compound matters, you (or someone in the family) may have a preexisting medical condition that could make the policy's premium prohibitively expensive. Worse yet, if you exceed the 63-day break in coverage before obtaining a new policy, your individual policy premiums will escalate, or coverage could be denied. In that case, you may be forced into your state's high-risk (and consequently high-cost) insurance pool under the provisions of the Health Insurance Portability and Accountability Act of 1996. Listen up, Fools: You don't want to let that happen.

So, if you leave your job prior to age 65, you'll almost certainly pay far more for such insurance coverage than you did while working. In some cases, that cost will be hundreds of dollars more per month. How much more will depend on your state of residence and the type of coverage selected. Therefore, the earlier you start the research, the easier it will be to incorporate this cost into your plans. Check out some of the Web resources listed at the end of this lesson for help on finding affordable health insurance.