(MONEY Magazine) – Early retirees are increasingly getting stuck for the cost of their health coverage as part of corporate downsizing. For instance, Unisys, the information management company with headquarters in Blue Bell, Pa., stopped covering the full cost of health insurance for retirees in 1993, two years after the company began shedding 26% of its work force. Among those affected was Bob Provan, 57, of Roseville, Minn., a liaison between U.S. and South American operations. He was laid off in December 1994 after 32 years with the company. Federal law requires Unisys to continue his insurance until July 1996. But he has to shell out $1,536 a year, which is $744 more than he used to pay. Worse yet, Provan knows that when he's finally forced to buy substitute insurance, "I can't expect to find comparable coverage at an affordable price."

Indeed, the No. 1 problem for most retirees under 65 is finding affordable health insurance. A healthy couple in their late fifties typically must pay $4,000 to $9,000 for a policy with a $500 annual deductible and an unlimited lifetime maximum benefit. (By contrast, a husband and wife who are both 65 and have paid FICA taxes for 10 years pay just $1,106.40 for Medicare, plus another $500 to $9,528 annually for a policy to fill the gaps in Medicare's coverage.) Unfortunately, all of your choices are shockingly expensive. Among them are the following:

COBRA. If, like Bob Provan, you work for a company with 20 or more full-time workers, you automatically remain covered by your ex-employer's plan for as long as 18 months (29 months if you are disabled) under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985. The cost for a couple: about $4,500 a year if they go to a health maintenance organization (HMO). Provan pays less because he is only insuring himself. His wife is 66 and covered by Medicare.

Individual policies. Your state insurance department (the number is in your phone book) may be able to give you a list of companies that sell individual coverage. Or call Quotesmith (800-431-1147), an industry-sponsored service that provides free price quotes on as many as 70 policies.

Consider only those plans that pay the following: 1) all hospitalization and surgery costs and 2) most costs for prescriptions and outpatient care.

To keep the premium as low as possible, accept a deductible of at least $1,000 and a 20% co-payment-meaning you pay the first $1,000 worth of expenses and then 20% of anything that exceeds the deductible. Your policy should limit your total out-of-pocket health-care costs to a so-called stop-loss amount of $5,000 annually and pay lifetime maximum benefits of at least $1 million. And make sure the initial premium can't be raised for at least one year and that the policy doesn't have troublesome restrictions, such as no coverage for emergency care in most foreign countries.

If you have cancer, diabetes or another chronic illness, ask your state insurance department if your state is among the 34 that offer insurance regardless of your health. Premiums can run as high as $12,000 a year for a couple, and most companies will impose a 12- to 18-month waiting period before insuring your illness, though you'll be covered right away for anything else.

Some carriers permit you to convert your company-sponsored group plan to an individual policy; however, conversion costs a couple as much as $10,000 a year. Healthy retirees can find a more comprehensive policy for 40% or so less.

Group affiliations. Thousands of fraternal, professional and support organizations offer group medical coverage to members. Start your search with outfits you may have already joined, like your college alumni association. Then, if you don't like what they've got, sign up with a group that provides something better.

For example, the American Anthropological Association (703-528-1902), which anyone with an interest in anthropology can join for $65 a year, offers its members coverage for about $358 a month per couple, depending on where they live. Parents without Partners in Chicago (312-644-6610), which single mothers and fathers in most states can join for $25 to $40 a year, offers comprehensive coverage for about $240 a month for a one-parent family, depending on where he or she lives.

Managed care. HMOs and preferred-provider organizations (PPOs) can cost as much as 80% less than comprehensive individual policies. For example, FHP International, an HMO in Fountain Valley, Calif. that serves 11 states, charges a California couple in their fifties about $350 a month plus a $5 co-payment for prescriptions and a $10 co-payment for doctor visits. FHP also pays 80% of hospital charges. You must use the organization's network of doctors, but a recent study by the American Medical Association shows that 77% of active physicians are now affiliated with an HMO or a PPO.