Health Insurance after Retirement
Retirement is something most of us are looking forward to. Although a growing number of Americans will have to keep working at least part-time even after retirement, most people are excited about having a little more time to enjoy themselves and to spend with their families. For most Baby Boomers, Social Security benefits will be available when they reach 62. But that still leaves another major obstacle to their plans for retirement: health insurance. Even though Medicare may not be available just yet for many retirees, getting free insurance quotes can help them make some smart choices about their future.
The Health Insurance Problem
As we age, health insurance becomes increasingly important. If we are retired, our fixed income can’t withstand the strain of a major medical bill so coverage is crucial. However, Medicare benefits don’t begin until age 65 and most employers do not provide health coverage for their retired workers anymore. The number of large companies providing such a benefit dropped from 66% to less than one-third between 1988 and 2007. Among smaller companies, only about one in 20 offered this benefit to retirees. And those numbers are expected to keep dwindling thanks to the economic downturn.
The three year difference between Social Security and Medicare eligibility makes retiring something many people are putting off longer than they would like to. Most Baby Boomers, for example, know they need the security of health insurance even if that means working a few more years. However, what many don’t know is they do have some options.
Post-Retirement Options
Ideally, your spouse will need or want to keep working for at least a few years after you retire. If he or she has health insurance coverage available through an employer, you should sign up. Chances are the prices for group insurance through an employer are going to be more affordable than what you’ll get from free insurance quotes for individual coverage.
For many couples, this is not going to be a possibility because the other spouse has either already retired or does not work for an employer offering health insurance benefits. In those situations, you might consider COBRA.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows employees who leave their job for any reason, including retirement, to continue their employer provided health benefits for up to 18 months. The employer doesn’t have to subsidize the benefits so the employee will have to pay the full premium for the coverage. However, the costs will still be lower than most individual health policies.
Individual health insurance policies are also available for retired Americans. Some policies have $200 monthly premiums combined with higher deductibles while other monthly premiums can be as high as $900. If you or your spouse has had health problems, you may not be able to find a policy or you may not be able to find a policy you can afford. That’s why it’s so important to start requesting free insurance quotes whenever you first begin thinking of retiring. You need to have a good idea of what you’ll be spending on health care if you decide to retire before you qualify for Medicare benefits.
Medicare Options
When you do reach 65 years of age, you can begin thinking about your Medicare options. This government provided insurance program can be more complicated than you might imagine. Medicare is divided into four different parts: A, B, C, and D. Medicare Part A is the original aspect of the program and covers only hospital care for individuals. You don’t have to pay anything for this coverage.
Medicare Part B coverage includes most of what we normally think of as health insurance. Doctor visits, for example, are covered under Part B. Medicare Part D, the newest component of the program, deals with prescription coverage.
While you can secure all three of these parts through the government, Medicare Part C allows you to get the coverage you want through private health insurance companies. The coverage and costs vary for plans under Part C but they must all include all ‘medically necessary services.’ These plans are sometimes referred to as Medicare Advantage plans.
Medicare Part C private plans do have some advantages. Many cover a wider array of services than do government provided plans. The out-of-pocket costs may also be lower. Plus, you’ll have more options and won’t have to settle for the program offered by the government.
If you choose traditional Medicare Part A & Part B, you should also consider purchasing a Medigap policy. These policies are provided through private companies (like Part C) but are standardized in terms of services offered and are meant to cover costs not included in the government coverage to minimize the financial risks to you and your spouse.
Before you decide which approach to Medicare makes the most financial sense for you and your family, you should request free insurance quotes. These quotes will let you compare the private coverage available with the costs of the traditional Medicare program.
Prior to Retirement
As you move closer to retirement age, start planning. Request free insurance quotes so you can look at all of your options, including individual policies before you become eligible for Medicare and private policies after you turn 65. You should also check with your employer’s HR department to find out what benefits you may have available after you retire or to learn how much COBRA coverage might cost per month if you can wait to retire until you are 63 years of age. Remember you do have options that might make it possible for you to retire sooner than you might have imagined.
July 18, 2009, Posted by Rainy Day Mitch