Retirement Health Insurance

 When your last day of work finally arrives, much of what you’ve known for decades will come to an end:  Morning commutes.  Afternoon meetings.  Evenings at your desk.  As you enter retirement, health insurance is on that list, too. Previous generations, who often spent their entire careers with one company, could count on at least some coverage following them in their golden years.  With companies cutting back benefits for employees, the likelihood programs for retirees will remain in effect is slim.  So, what do you do?

 Despite the best intentions, it would seem health care reform has created even more confusion.  None of this is helped by the ongoing political wrangling, of course, but the fact is the will-they-or-won’t-they nature of the debate is complicating the choices of many people.  It’s tough enough to select a policy – the increase in cost makes it enticing to pick the cheapest and take your chances.  Before you do that, carefully examine the particulars.  It would be terrible to find out the hard way your needs weren’t being met.

 After you leave your job, there are plans in place to provide coverage for up to 18 months under the Consolidated Omnibus Budget Reconciliation Act (COBRA).  By law, your employer must lay out a program to allow you to extend the same benefits in place while you were working, so long as the company is still in business.  However, it’s very important you understand you will be required to foot the full monthly bill – the fees will no longer be divided between you and several other coworkers.  On top of that, the insurance provider may tack on additional fees of 2% for administrative costs.  All that said, it still may be your least expensive option, but it’s worth shopping around.

When your COBRA period lapses, you may have to find a way to cover the gap until you are covered by Medicare.  There’s no easy way to say this, but retirees in search of health insurance plans often find it challenging.  Because of the increase in illness as we age, not to mention the cost of prescription drugs, many policies have limited coverage or pricey premiums.  Married couples have begun searching for individual plans as a means to save money: insurance companies use defined age ranges to determine customer cost.  If one spouse is 64 and the other is 61, buying separately could save you some – both of you won’t be paying the “64” rate.  Whatever you do, whether it’s taking a high deductible or stashing money in a Health Savings Account, at least maintain some form of coverage.  Nobody wants a medical emergency to wipe out their nest egg.

 Of course, Medicare will become available when you reach age 65.  Though it will take a significant amount of pressure off, do keep in mind there are still some services you’ll have to pay for.  If you visit the dentist or eye doctor, you will need to seek out a supplement to help you cover those expenses.  Much like the private plans that will help you between COBRA and Medicare, there are a wide variety of “Medigap” policies available to fill in the cracks.  You will always have premiums, deductibles, and co-pays, but by getting an affordable plan with appropriate protection, you can be sure you’ll be able to do all your retirement planning was meant to: enjoy yourself.