“I’m Retiring – What do I do about Health Insurance?”

    Approaching retirement requires planning preferably in advance. Next to your income, health insurance is the most important issue to explore because you certainly do not want to have a period of time in your life when you are not insured for medical care. Your options for health insurance depend upon your age. I will divide this article into several sections dealing with various age groups.

    Under age 65: If you are under the age of 65 and planning to retire, you should first check with your employer to see if you are eligible to stay on the group health insurance plan; that is usually the least expensive way to obtain coverage. Depending on the employer and your years of service, you may be eligible to stay on the plan until your 65th birthday. Or, you may be eligible to continue your benefits under the COBRA law for 18 months. If this is not the case, and your employer tells you there is no health insurance coverage once you retire, you may wish to check with your spouse (if you have one). If your spouse is employed you may be able to be added to that insurance plan. If not, your only alternative is to purchase an individual health insurance policy to carry you through until you reach the age of 65. Presently, the premiums are expensive for individual health insurance and you are looking at a range of $320 to $400 per month depending on the type of coverage you select.

    Approaching age 65: If you plan to retire in the month in which you turn 65, you will be eligible for Medicare. Your employer may allow you to continue on the group plan, which will be secondary to Medicare. If your employer tells you that you cannot continue on the group health insurance plan, you must choose a Medicare supplement (also known as Medigap) to fill in the gaps and pick up where Medicare leaves off. Or, when a person becomes eligible for Medicare, you may choose an HMO plan but that will be in lieu of Medicare.

    If you have a spouse, and your spouse is actively employed by a company with more than 20 employees, you may be able to continue health insurance benefits under your spouse’s plan. If you do this, you may be able to refuse Part B Medicare until your spouse also retires.

    Over age 65: If you have been working since your 65th birthday and are now getting up in years and decide to retire, you have a few choices. If you have been actively employed by a company with more than 20 employees chances are you are on the group health insurance plan and Medicare is secondary or you have refused Part B Medicare. This is known as TEFRA. The TEFRA law simply stated, means that if you are 65 or over and actively employed by a company with more than 20 employees, your group insurance is primary and Medicare is secondary. Many people that fall into this category find that they do not need Part B Medicare until they retire. The same holds true if you are eligible for benefits under the plan that your spouse has because your spouse is still working. When you receive benefits beyond age 65 under your spouse’s plan, it is known as the DEFRA law. So, if you don’t have a spouse, and you are now getting ready to retire, well beyond your 65th birthday, you will have to make sure that you get enrolled in the Medicare program if you were TEFRA eligible and find out if your employer will allow you to stay on the group plan as secondary to Medicare. If not, you will have to purchase a Medicare supplement. It is very important that you get a certificate of insurance if you are on the group plan to prove that you were continuously insured and that you are no longer eligible to remain on the group plan. With a certificate of insurance (a document from the insurance company showing the dates you were cover) you will be able to purchase a Medicare supplement from any company selling them with no waiting period for pre-existing conditions.

    If you have been working for a very small company beyond the age of 65, Medicare is primary and you may or may not have a Medicare supplement. There might be a waiting period for pre-existing conditions when you go to purchase a Medicare supplement if this is your situation.

    Long term care insurance: The need for long term care is the single greatest threat to your financial security as you get older. Long term care insurance will help protect your assets when you require someone to take care of you, whether you have someone coming to your home, or if you become institutionalized, use an adult day care center, or an assisted living facility, etc. You should certainly explore the financial ramifications of purchasing long term care insurance when you retire if you have not already done so.

    Irene Card & Betsy Card share the responsibilities of running Medical Insurance Claims, Inc. a health insurance services company . If you have questions relative to this column or other related topics, we invite you to call (973) 492-2828, or visit our contact page.