Several options available in health coverage for early retirees

For months, media reports have focused on the troubles with and the state insurance exchanges set up under the Affordable Care Act. Now the government is reporting that some eight million people have signed up for health insurance on the exchanges. But that’s not the end of the story. It’s a whole new world of health insurance, so you need to know how to navigate the pitfalls.

For example, when you retire, you can usually keep health insurance through your employer for up to 18 months through COBRA. That’s the federal law that requires employers with 20 or more employees to let workers stay on their health plan after they leave their jobs. But you’ll have to pay the full cost yourself, and that could be pricey because employers generally pay 70 percent to 85 percent of the premiums.

But losing employer coverage (even if you are eligible for COBRA) is one of the “life-changing events” that can allow you to buy health insurance outside of open-enrollment periods, whether you buy a policy on your state exchange or directly from an insurer or agent.

If you buy on the exchange, you may qualify for a premium subsidy even if you earned too much while working. To be eligible for a subsidy, your income in 2014 must be less than $46,680 if you’re single or $62,920 for a couple. That includes the amount you earned while working plus your expected income for the rest of the year. Estimate your income as carefully as you can, and notify the exchange if the amount changes -- you could get a bigger credit if your income drops or avoid a surprise tax bill if your income rises. In addition, if your income is less than 250 percent of the federal poverty level ($29,175 if single or $39,325 for a couple), you can qualify for a cost-sharing subsidy that reduces co-payments and other out-of-pocket expenses — but only if you buy a silver insurance plan.

Note that converting a traditional IRA to a Roth or taking taxable withdrawals from a traditional IRA or 401(k) boosts your income. However, Roth withdrawals don’t count as income. Contributions to a health savings account reduce your income.