Retirement Health Insurance: Evaluating Your Post-65 Options

When it comes to retirement, health care costs are expected to be one of the largest expenses. And for early retirees, those costs can quickly add up if they don’t plan for them accordingly. With longer lifespans, health insurance costs rising faster than inflation and the fact that more people are retiring earlier, finding affordable healthcare options in retirement has become a challenge.

Whether you’re planning to retire early or are already an early retiree, there are a few key steps you can take to evaluate your retirement healthcare options and position yourself for a healthier financial future. First, you’ll want to organize your budget and assess your healthcare requirements. Make a list of any chronic conditions you may need medication for and determine the amount in total that your anticipated healthcare expenses will be. This will help you establish a realistic savings goal and set an appropriate amount to reserve for your healthcare needs in retirement.

Another crucial step is to look into what coverage you may have at work once you reach retirement age. Many employers offer retiree health benefits that are more comprehensive than what’s offered by Medicare. These plans can also include a limit on out-of-pocket costs and prescription drug coverage. If your employer offers retiree health benefits, contact your employer’s benefits department to learn more about them. You’ll also need to figure out how these benefits will change when you leave your job and consider your options for supplemental coverage.

Some early retirees use a plan like the Health Insurance Marketplace to buy private health insurance until they’re eligible for Medicare. This can be a good option if you’re healthy enough to qualify for a plan that’s cheaper than traditional Medicare and you can afford the monthly premiums. However, you should carefully review the plans on the Marketplace and talk with a local insurance agent about your options, as well.

You might also Get started that your current employer offers a retiree health plan that provides supplemental insurance for those who are Medicare-eligible, similar to how some companies provide retiree health benefits. These supplemental policies are called Medigap and can help pay for Medicare deductibles, copayments and coinsurance. However, you’ll need to weigh the pros and cons of keeping your employer’s retiree insurance versus getting a Medigap policy.

A final consideration is short-term health insurance, which can be less expensive than the ACA marketplace for early retirees but isn’t designed to be a long-term solution. Additionally, some states have banned the sale of short-term insurance, so it’s important to check your state laws and eligibility before considering this option. For a more reliable and cost-effective solution, you might consider working with an experienced independent insurance agency that holds contracts with the major providers in your area to offer you affordable options. They can also guide you through the complex decision-making process. This is especially helpful for those who don’t have the time or resources to research their options on their own.