Health & Well-Being in Retirement
Jul 10, 2018

Understanding Your Retirement Healthcare Options

Understanding Your Retirement Healthcare Options


 

For most professionals, including those in the oil, gas and chemical industry, their health insurance policy is provided through their employer. Though some employers may offer group health insurance benefits that apply after retirement, many others do not, meaning that retirees can often find themselves without coverage upon retiring, or relying solely on services like Medicare. It’s no secret that medical bills can add up quickly, and that’s an especially important thing to consider if you’re retired. Preserving your nest egg may be the biggest responsibility all retirees have to deal with, and few things can impact those funds more severely than medical bills.

From Medicaid to long-term care, to the Affordable Care Act, the range of healthcare choices available to retirees today can be dizzying, and most of us aren’t comfortable ‘winging it’ when it comes to our health. So, let’s try and make some sense of it. Keep reading as we look at some of the more common healthcare options available to retirees and get a sense of how to manage this complex retirement obstacle.

Consider COBRA

Some retirees have the opportunity to keep their health benefits after leaving their place of work. If you are employed by a larger company (at least 20 employees), you’ll be able to stick with your employers health plan for at least 18 months through the Consolidated Omnibus Budget Reconciliation Act (COBRA). Through COBRA, you can continue your company-sponsored plan, including coverage for spouses and dependent children. However, you will likely pay more for this coverage, as individuals covered under COBRA typically have to pay the entire premium themselves, rather than the employer helping out. Even so, it’s usually cheaper than an individual plan.

Medicare 

At 65, retirees become eligible for Medicaid benefits. This can come as a great relief: Finally, a cost-effective alternative to expensive private insurance policies. However, experts caution against seeing this program as a cheap stand-in for comprehensive insurance. Medicare can be very specific in the coverage it provides, and will likely not be as comprehensive as your previous insurance policy. It does not, for instance, cover hearing aids or dental care, two common priorities for retirees. So, while Medicare is not without its benefits, it’s important to understand its capabilities. The whole policy is also notoriously complicated, so you may want to sit down with an advisor and let them walk you through.

ACA & Health Insurance Plans

 The Affordable Care Act, perhaps known better as “Obamacare”, is available to individuals who retire before 65 without coverage. Some use ACA as a “bridge” to Medicare, which kicks in at 65. However, the coverage you can receive through the program — and whether you’ll save any money compared to purchasing a policy at full-price — will vary depending on your income and your state of residence. Explore your state’s insurance marketplace, and crunch the numbers yourself of with an advisor.

Consider Long-Term Care Insurance

Retirees should take some time to consider whether they or a loved one might need long-term care in the future. This would include medical needs to maintain quality-of-life for someone with chronic illness or a disability. If you suspect you’ll need these services, consider purchasing long-term care insurance, and consider doing it sooner rather than later. The price to purchase one of these policies increases as you get older – the rate you’ll pay at 55 could be significantly less than what you’ll pay at 65. So, don’t hold off if you think you’ll need it down the line. However, be mindful that long-term care coverage is an additional safeguard, not a substitute for a standard health insurance policy.

Have Emergency Funds

Having coverage is important, but most of us wouldn’t mind having a second lifeline in case of emergency. Putting aside emergency funds is a simple and effective way of protecting your financial (and physical) well-being. The big question: How much do I save? The answer really depends on your expenses. Experts recommend saving 3 to 6 months of expenses in case of emergency, but you should also consider your own financial situation. Take a hard look at your spending: what bills do you have, and how do you plan on spending your retirement? A retiree with a large portion of their money in the stock market, for instance, may want to save more in case the market takes a dip.

A Healthy Future

There is no do-it-all healthcare solution for retirees. If there were, we wouldn’t have this much trouble choosing coverage. All of us want to make the right choice about our health, and each option has pros and cons to consider. So, why not do it with an expert by your side? Here at Baird Retirement Management, our team has been helping retirees plan long, healthy retirements. Let’s work together.

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