Retirement often means that you put employer-related job stress in your rear view mirror. For most people it also means that you leave your medical plan and other benefits behind. The lucky few that get retiree coverage may still have to scramble to find a low cost policy for their spouse and their children. Few employers will cover former employees even fewer will cover their spouses or families.
Understanding the coverage options that you are eligible for when retired is important. The cost of premiums over the months and years can add up to tens of thousands of dollars. The financial impact of having the wrong insurance can wipe out years of savings.
Please note that time is of the essence. You may have 60 days or less to make a decision about your retiree coverage. Please ask your broker about the deadlines involving any option you are considering.
When you retire, you may be faced with a myriad of health insurance choices. Depending on your age and other factors your choices may include Medicare, COBRA, an individual health plan, a federally subsidized Obama Care plan and/or a state subsidized Medicaid policy. Which one is likely to work best for your retirement?
This post will cover the following options:
- Individual/Family Insurance
If you are age 65 or older or disabled, you will probably qualify for Medicare. If so, this will probably be your best option. The coverage is good, the cost is low and you most providers will accept payment from Medicare.
Original Medicare includes Part A and Part B. Most Americans who qualify for Medicare will get Part A without a monthly premium. However, without Part B your doctor visits will not be covered. Without part C or D your prescriptions will not be covered.
You can request quotes and information from insurers offering plans that coordinate with Medicare including Part D prescription drug plans from this site.
This is rarely the best option. Before the Affordable Care Act stopped companies from denying enrollment and increasing rates based on an applicant’s medical history, this was one of the only viable choices for people with significant medical issues. Since other options are usually less expensive, COBRA is less attractive today.
COBRA allows you to continue to have employer-sponsored group insurance for a period of time. You can expect one change regarding who pays for the coverage. You can expect that you will pay 100% of the cost. Larger companies are required to offer COBRA, but are not required to pay for it.
Individual or Family Insurance
If you do not qualify for Medicare or Medicaid your best option will likely be to purchase an individual or family health insurance policy. In every state you will have programs offered from various private health insurance companies.
If you qualify for a subsidy through the Affordable Care Act, you will pay less money for your policy. Please note, however, that if you qualify for Medicaid or Medicare you will not be eligible for a subsidy.
If your income is below the federal poverty limit you will probably qualify for Medicaid. In some states the income limits are higher. It can also be higher if you have a child or are pregnant.
Medicaid is a very inexpensive way to get healthcare but it has drawbacks. Since the payments made to doctors is often very low, the more established or experienced doctors are generally opt out of the program.
No matter which option you choose, be sure that you understand your policy. You should know what providers (doctors, hospitals and pharmacies) you can receive medical services and prescriptions from and what your cost shares (deductibles, coinsurance and copays) will be.