Picture a hypothetical 62-year-old salaried worker at Doosan Bobcat opening the voluntary separation packet on the kitchen table this spring. According to Valley News Live, Doosan Bobcat North America offered a voluntary separation program to U.S. salaried, full-time employees, with a payout calculated by years of service and position grade, three months of COBRA health coverage at the active-employee rate, and extended access to Spring Health mental wellness services. The payout looked like permission to retire. Then he flipped to the benefits page and saw where the company’s help ended.
Medicare does not begin until 65. COBRA may remain available after the first three months, generally at full cost, but he still has roughly 33 months of premiums to fund before Medicare. The instinct many people have in this position is to switch on Social Security at 62 to help pay those premiums. That decision can solve a temporary cash-flow problem by permanently shrinking the check waiting on the other side.
Versions of this scenario appear on retirement forums often: someone accepts a package, sees the health-insurance bill coming, and files for Social Security the month the employer subsidy disappears. The insurance gap lasts less than three years. The claiming decision can last three decades.
Why Claiming Early to Buy Insurance Is the Trap
One Social Security rule dominates the decision. File before full retirement age (FRA), which is 67 for anyone born in 1960 or later, and the monthly check is permanently reduced. Claiming at 62 can mean a 30% reduction. Suppose his benefit at FRA would be $2,400 a month. Filing at 62 reduces it to roughly $1,680, a difference of $720 a month.
The fair comparison must include the checks he receives early. By age 67, the early filer has collected approximately $100,800 before COLAs. From that point forward, the person who waited receives an additional $720 each month. Ignoring taxes and COLAs, the simple break-even point lands around age 79. If he lives to 87, waiting until 67 produces approximately $72,000 more in cumulative benefits.
Future COLAs apply to both benefits, but the larger starting check produces larger dollar increases. The 2026 Social Security cost-of-living adjustment was 2.8%. The choice still depends on health, longevity, and immediate cash needs. But the right question is not whether $1,680 would help with insurance today. It is whether 33 months of premiums justify giving up $720 a month after 67.
How the Pieces Actually Connect
Marketplace savings are based on expected household income for the full calendar year, not simply what comes in after the job ends. That makes the first separation year tricky. Severance, wages earned before departure, investment income, and most traditional 401(k) withdrawals can all raise Marketplace modified adjusted gross income (MAGI) and reduce the premium tax credit.
Social Security enters the same calculation. Marketplace MAGI includes Social Security benefits, even the portion that is not federally taxable. Filing at 62 to pay the insurance premium can therefore reduce the subsidy lowering that premium. The solution starts nibbling away at itself.
The cleaner move is to model the separation payout, cash savings, taxable investment gains, and retirement withdrawals together. Spending existing cash does not create income, while qualified Roth withdrawals generally stay outside Marketplace MAGI. Traditional 401(k) withdrawals generally do not.
Another useful escape hatch opens when the company’s COBRA contribution ends. If he must begin paying the full COBRA cost, HealthCare.gov generally allows a Special Enrollment Period to move into a Marketplace plan. He does not necessarily have to choose between three months of COBRA and 33 months without coverage.
Medicare is not free at 65 either. The standard Part B premium is $202.90 in 2026, with an annual deductible of $283. Those are known, budgetable expenses. The unknown is how large his Social Security check will be for the next two or three decades.
What to Sit With Before Signing
Two factors deserve most of the attention:
- Price the entire health bridge. Compare the three months of COBRA at the active-employee rate, the full COBRA premium afterward, and Marketplace coverage based on projected annual household income. Run the separation year and the following year separately because the severance can distort the first one.
- Give the claiming decision its own timetable. Leaving Doosan Bobcat does not require Social Security to begin at 62. First determine how much of the insurance gap can be covered through severance, cash, Marketplace tax credits, or carefully chosen withdrawals. Then compare claiming at 62, 67, and 70 on its own merits.
A spouse’s earnings record, a pension, health concerns, and the size of the separation payment can all shift the answer. For most 62-year-olds facing the end of an employer health subsidy, though, the useful frame remains simple: price the short bridge before pulling the lifetime lever.
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