Health Insurance and Early Retirement Plans: Evidence from the Affordable Care Act

Understanding how individuals make retirement plans is key to designing effective policy. In particular, access to affordable insurance during retirement can play an important role in the labor supply decisions of older adults. In this study, I examine the impact of the 2010 Affordable Care Act (ACA) on the retirement plans of older adults. The ACA includes several provisions that significantly increase access to affordable insurance not tied to employment. I find that the ACA decreased the subjective probability of working past age 62 by 5.6 percentage points, representing a 9.9 percent decline, among persons without employer sponsored retiree coverage relative to persons with employer sponsored benefits. On average, individuals expect to retire about 3.6 to 7.2 months earlier due to the ACA.