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Health care insurance after retirement: What you should think about in advance
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As you get ready for retirement, it is important that you have a health care plan in place that provides sufficient coverage throughout your retirement, especially if you choose to retire early. While many seniors will rely on Medicare to be their primary insurer, those who retire before they are eligible to enroll in Medicare at age 65 will need to consider alternative options for health insurance coverage.
Retiree health insurance: Before you retire, check with your employer to determine if retiree health benefits are available to you upon retirement. Unfortunately, retiree health benefits are becoming less common and employers that do offer it often require you to pay a larger share of the cost that can make such coverage expensive.
COBRA: Another way to continue to receive health insurance through a former employer is with COBRA coverage. This could be an attractive option for those who want to stay with in-network providers during retirement. Generally with COBRA, the employer will no longer pay any portion of your premium resulting in higher premiums than you are used to paying. COBRA is only available for 18 months from your last date of employment, so you still may have a gap in health insurance coverage until you are eligible for Medicare.
Spousal coverage: If you are married and your spouse works during your retirement, see if you are eligible for coverage under your spouse’s employer plan. This will likely increase your spouse’s premium, but it is often more cost-effective than getting your own individual coverage.
Part-time employment: For those who are interested in pursuing part-time employment during retirement, not only will you have the benefit of additional income, your new employer may be able to offer you affordable health care coverage options.
The health insurance marketplace
Health insurance exchange: The Affordable Care Act created a federal health insurance marketplace that includes health insurance options for retirees. You cannot be turned down for coverage, and certain low-income retirees may be able to qualify for subsidies. While premiums may be higher than you are used to paying, this can still be a more affordable option than a private individual policy, which may be subject to lifetime maximum coverage and restrictions for preexisting conditions. You can research available plans and pricing by visiting healthcare.gov.
Medigap: Even after enrollment in Medicare, you may incur uncovered medical expenses. You may consider purchasing Medigap coverage. Medigap is a private health insurance policy that can help pay for health care expenses not covered by Medicare, including copayments, deductibles and coinsurance. It’s important to know that in order to be eligible for Medigap you must already be enrolled in Medicare Parts A and B.
What to do now
Many personal factors including medical history, how long you plan to continue to work and the resources you have available to pay for your care, will need to be considered when planning for healthcare costs in retirement. As you consider retirement, be sure to consult your TIAA advisor, who can help you plan for future health care expenses.
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