Health insurance after retirement: Things that you must know
Retiree health care benefits have undergone a drastic drop in the past few years. According to the Kaiser Family Foundation, the percentage of firms with more than 200 workers that offered retiree health coverage have plummeted from 66 percent in 1988 to 23 percent in 2015. Organizations that still offer such benefits to their retired employees impose many restrictions, increased premiums, and higher cost-sharing requirements that the retiree must pay. If you are on the verge of retirement, it could be a wise idea to consider buying a retirement insurance plan.
There are certain tax-implications to consider, too. Here are a few other points to keep in mind if you are approaching retirement:
• Do you have the option of continuing with your employer coverage after retirement? It all depends on your employer. Employers are not bound to provide retiree coverage, and even if they have any provision of the same, they may offer it with some changes in premiums or benefits.
• Find out if you are eligible for applying for a private plan. Opt for one that allows you to enjoy premium tax credits along with minimum out-of-pocket costs. The cost of a policy depends on two factors – family income and the number of family members.
• If your employer does not provide retirement benefits, then you will have to opt for a retiree coverage. You should choose a policy that also covers your spouse. Sometimes, employers do provide retiree coverage but with a rider. They may have a ceiling on the claim amount. Some policies offer only a stop losscoverage. Under this arrangement, your insurer will pay your medical expenses only when they reach a certain amount.
• If you have the option of continuing with your employer-provided health plan, find out how it would impact the health coverage (consider both yours and that of your spouse's). Check the benefits section of your plan to know how it affects your benefits if you happen to be eligible for availing a Medicare plan. You can get this information also by contacting your State Health Insurance Assistance Program (SHIP). They can even guide you in choosing between a private health plan and a Medicare Supplement Insurance (Medigap) policy.
• The Consolidated Omnibus Budget Reconciliation Act (COBRA) has been designed to protect you and your family in case you are laid off, or your employer is no longer in the business or has gone bankrupt. This law ensures that you never lose your employer-sponsored health benefits. The COBRA coverage lets you continue with your employer-sponsored health plan provided you pay the premium yourself. For over three decades, COBRA has enabled retirees, as well as laid-off employees, dependent children, and spouses, to continue with employer's insurance policy at group rates.
• Planning to retire early? There is also a health plan that suits you perfectly. Thanks to the Affordable Care Act (ACA) of2009, early retirees with pre-existing conditions can purchase health insurance coverage at affordable rates, although the cost may vary by location.
• After yourretirement, you will have to first avail the Medicare plan to get your payments. Your retiree coverage often resembles the coverage under Medicare Supplement Insurance (Medigap). However, there is a difference between the retiree coverage and the Medigap policy. A Medigap policy strives to fill up the gaps commonly found in Medicare like coinsurance and deductibles. Retiree coverage has some of its unique benefits such as paymentreimbursement for extra days in the hospital.
Retirement will come before you know it. So, start setting aside some money today to cover the cost of your health insurance plan during retirement. Remember, even when you have the Medicare or any other health insurance, you will still have to meet other medical expenditure, including prescription medicines and most importantly, premiums for your insurance policies. So, plan accordingly.