In recent decades, the pathways to retirement have become increasingly varied. Moreover, retirement is no longer the absorbing state it once was. With nearly 20% of early retirees reversing their retirement decision, this paper sought to answer three questions regarding the role of insurance in returning to work after retiring before Medicare coverage. First, to the question of whether insurance coverage was an important determinant of returning to work, these results indicated that it depended on the type of work to which one was returning. Insurance coverage appeared to be of little importance in the transition back to full-time work but was important for transitioning back to part-time work—but only when considering different forms of coverage. This suggests that insurance was generally important in the process because more than three quarters of the transitions back to work were to part-time employment.
Second, to the question of whether the relationship between insurance and returning to work was conditional on the source of coverage, these results suggest that the impact of insurance coverage on returning to part-time work was complex. For instance, the relationship between coverage and part-time work was nonsignificant in the models of any coverage, but a more nuanced relationship was evident when comparing different patterns to those with employer insurance. Specifically, relative to those with insurance through a former employer or through their spouse’s employer, individuals who purchase private nongroup insurance were at greater risk of returning to work. Moreover, in these results, the uninsured were no more likely to reverse their retirement than were those with employer insurance. Taken together, these results suggest that the expense of nongroup coverage may have been a key factor driving people back to the labor market. So in contrast to Lin (2005)
—who finds that “uninsurance” increased reemployment among displaced workers—these findings suggest that “underinsurance” increased the odds of part-time reemployment among retirees.
It is also noteworthy that public insurance reduced the odds that individuals will transition back to part-time work. However, unlike Medicare coverage from age eligibility, eligibility rules make it difficult to keep Medicare disability coverage upon securing new employment (Social Security Administration, 2011
). As such, it is not surprising that people with this form of coverage were less likely to return to work nor that many lost their public insurance once they did return.
Third, to the question of whether insurance coverage increased once retirees returned to work, analyses of the change in coverage after returning to work suggest that, after returning to work, employer-provided insurance increased for those who were uninsured or insured through nongroup coverage during retirement. This not only highlights the importance of employer insurance for successful early retirement but also provides limited evidence that those without this form of insurance are seeking out new coverage as they return to work. Thus, although the costs of private nongroup insurance may be what is driving people back to work, some people who return to work are successfully securing better coverage than they had prior to reentry.
With the passage of the Health Care and Education Reconciliation Act of 2010, health insurance should be more affordable, public insurance more available, and Medicare increasingly comprehensive (Health Care and Education Reconciliation Act, 2010
; White House, 2010
). Although uninsurance should drop dramatically as a result of this legislation, individuals will still secure coverage through a variety of sources. The results presented here suggest that different forms of coverage will continue to exert distinct influences on individuals’ postretirement labor force behavior. Taken as a whole, however, these findings indicate that the Health Care and Education Reconciliation Act may impact labor force reentry in at least two ways. First, if the expansion of coverage increases individuals’ health and limits disability, people should be less likely to retire for health-related reasons, and more able to seek out postretirement employment should they so choose. Second, these results suggest returning to part-time work should increase if individuals meet the mandate of coverage through private nongroup insurance rather than from employer-provided insurance—unless, of course, such a mandate decreases early retirement as people become more locked to the insurance provided by their employers.
There are two notable limitations to the present study. First, there is a lack of consensus on how to measure postretirement labor force behavior. Some studies include any work after retirement—regardless of whether or not there is a period of nonwork between employment transitions (Pleau, 2010
). Others, like the method used here, require a period of nonwork between employment and returning to work in order to constitute reentry. Empirically, this lack of definitional consensus leads to widely varying estimates of the size of the population that reenters. Theoretically, inasmuch as these different postretirement labor force transitions are distinct processes, it becomes difficult to disentangle the mechanisms that underlie the transitions between them.
Second, the discussion of returning to work used in this analysis has implied that returning is a risk to be avoided. However, for some people, work is preferable to retirement, and these people elect to reverse their retirement for reasons other than need. Although I attempted to control for this with a variety of measures (including education and retirement satisfaction), data limitations prohibited me from directly assessing whether individuals transition from full retirement out of need or because of choice.
These limitations aside, this work makes several contributions to the research on work and retirement. First, it highlights the importance of considering insurance coverage in reversing retirement. Second, this research suggests why insurance may not be more influential on returning to work. That is, insurance coverage may be driving people to return for reasons other than securing new coverage (e.g., to offset the costs of private coverage). Finally, this work points out that even though coverage may be more comprehensive and more widely available because of the Health Care and Education Reconciliation Act of 2010, people will still secure supplementary private coverage through a variety of ways. This research suggests that the form this private coverage takes will differentially shape the odds that people will transition back to work after early retirement.