As retirement approaches, many people start to consider their health insurance options. With the cost of healthcare continuing to rise, it’s important to have a plan in place for covering medical expenses during retirement. In this article, we’ll explore what types of health insurance you can get when you retire and how they differ from traditional employer-sponsored plans.
Medicare
The most common type of health insurance for retirees is Medicare. This federally funded program provides coverage for people over 65 as well as those under 65 with certain disabilities or chronic conditions. Medicare is broken down into several parts:
Part A: Covers hospital stays, hospice care, and some home health services.
Part B: Covers doctor visits, outpatient care, preventive services, and medical equipment.
Part C: Also known as Medicare Advantage, these plans are offered by private insurance companies and provide all the benefits of Parts A and B along with additional coverage options.
Part D: Provides coverage for prescription drugs.
Medicare is not free, however. Most people pay for Part B through monthly premiums that are deducted from their Social Security benefits. Additionally, there are deductibles, copays, and coinsurance costs associated with each part of Medicare.
Medigap
For those who want more comprehensive coverage than what Medicare provides, there are Medigap plans. These supplemental policies are sold by private insurance companies and are designed to fill in the gaps left by Medicare. Depending on the plan you choose, Medigap may cover some or all of your deductibles, copays, and coinsurance costs.
It’s important to note that Medigap plans only work in conjunction with original Medicare. If you have a Medicare Advantage plan, you cannot also have a Medigap policy.
Retiree Health Plans
Some employers offer retiree health plans to their former employees. These plans are similar to traditional group health plans but are specifically designed for retirees. Retiree health plans may offer more comprehensive coverage than Medicare, but they can also be more expensive.
One advantage of retiree health plans is that they often include prescription drug coverage, which is not a standard part of Medicare. Additionally, some plans may cover services like dental and vision care, which are not covered by Medicare at all.
COBRA
If you retire before you’re eligible for Medicare and your employer doesn’t offer a retiree health plan, you may be able to continue your employer-sponsored coverage through COBRA. This federal law allows you to stay on your employer’s group health plan for up to 18 months after your retirement.
The downside of COBRA is that you’ll be responsible for paying the full premium yourself, plus a 2% administrative fee. For many people, this can make COBRA prohibitively expensive.
Individual Health Insurance
If none of the above options work for you, you can purchase individual health insurance on your own. This can be an expensive option, especially if you have pre-existing conditions or require a lot of medical care.
Under the Affordable Care Act (ACA), insurers cannot deny coverage based on pre-existing conditions, but they can charge higher premiums for older individuals. Additionally, ACA plans may not cover all the same services as Medicare or retiree health plans.
Final Thoughts
As you approach retirement, it’s important to consider your health insurance options carefully. Medicare is the most common choice for retirees, but it may not provide all the coverage you need. If you want more comprehensive coverage, you may need to supplement Medicare with a Medigap policy or retiree health plan. Alternatively, you could purchase individual health insurance on your own, although this can be an expensive option.
Ultimately, the best health insurance plan for you will depend on your individual needs and circumstances. Be sure to research each option thoroughly and consult with a financial advisor or insurance agent if you need help making a decision. With the right plan in place, you can enjoy your retirement knowing that your healthcare needs are covered.
