Health Coverage in Retirement

If you’re like many Americans, you probably receive your health insurance through your job. However, when it comes time to retire, you’ll be faced with a difficult — and potentially costly — problem. Here are some tips for navigating the complicated world of health coverage in your golden years.

Check with your current provider

Explore how your current health coverage will change when you enter retirement. Some plans allow you to extend your coverage if you’ve been with your employer for a certain amount of time or reached a certain age. To find out, read up on the healthcare coverage literature that your employer provides, consult with your company’s human resources department or call the insurance provider with your questions.

Extend your coverage with COBRA

Even if your employer-provided healthcare coverage doesn’t have a retiree benefits package, you may still be able to receive insurance through COBRA provisions. COBRA allows you to continue receiving coverage for a set period after employment ends. However, it’s still a good idea to check with your employer about the cost and duration of coverage through COBRA. You could get a good deal — CMS.gov explains that some employers subsidize COBRA coverage.

Age matters

When it comes to finding healthcare coverage after retirement, your age matters. If you’re under 65, you cannot be denied coverage due to any pre-existing conditions, thanks to the Affordable Care Act. However, you may be charged a hefty premium — over $1,000 per month, in some cases. While COBRA coverage can provide a short-term solution, Forbes contributor Erik Carter recommends looking into Marketplace plans, group retiree coverage or a health savings account.

Read up on Medicare

For retirees over 65, Medicare is a primary option. You’ll have to choose between an original Medicare plan and a Medicare Advantage Plan. Each comes with a distinct set of advantages and drawbacks. An original Medicare plan is widely accepted by primary care providers and specialists alike, but you’ll have to pay extra for prescription drug coverage and the plan has no out-of pocket maximum. A Medicare Advantage Plan comes with vision, dental and prescription coverage along with a capped out-of-pocket spending limit, fewer doctors who will accept your coverage. Since the Medicare system is notoriously complex, consider consulting an expert to help you choose the best option for your lifestyle.

Plan ahead

As with any expense, it’s a good idea to budget for your healthcare coverage. Depending on your health and coverage plan, costs can vary widely. While some plans may boast about $0 premiums, they often come with higher coinsurance costs or pricier copays, according to U.S. News. Furthermore, Fidelity estimates that the average retired couple will probably incur about $285,000 worth of medical expenses throughout their golden years. However, this figure doesn’t factor in long-term care. If you’re still employed and looking to save for your medical expenses in retirement, consider a health savings account. Not only do HSAs provide tax benefits, but they also allow you to spend tax-free dollars on your medical expenses in retirement.

For guidance on choosing a plan, consider talking with a health insurance agent that specializes in finding coverage for retirees. These experts will explore your options based on the prescriptions you need and your preferred doctors. If you’d like to reach out for help, Dana Anspach of The Balance recommends contacting Allsup's team of Medicare advisors or your state’s State Health Insurance Assistance Program.