Healthcare During Retirement
By Robert Skladany
Keeping Yourself Covered
Healthcare costs are increasing at a rate far greater than most Americans’ income. Employers are raising premiums or reducing benefits. Retiree health plans are being cancelled. Workers who thought they would have healthcare coverage in retirement are discovering this critical benefit may no longer be provided. Here’s how to make sure you’re covered.
Under age 65? There are several possibilities to consider:
Employer Sponsored Healthcare Coverage
Many employers provide coverage to current employees. And by law, employers must offer the same coverage to employees age 65 and older, so if you are a senior and still working, you’re all set.
Retired from your long term employer and need coverage? Find another employer! Many employers, in an effort to attract mature workers, are offering healthcare coverage to part time employees. You usually have to work between 25 and 35 hours a week to qualify and you may have to pay a higher premium than your full time coworkers.
Employer Sponsored Retiree Healthcare Coverage
Employer sponsored retiree healthcare coverage permits qualified retirees to continue employer group coverage at subsidized rates. When provided, the coverage is relatively comprehensive and the cost is reasonable considering the alternatives. If you are 65 and enroll in Medicare as well, Medicare is secondary to your retiree coverage, paying essentially what your employer plan does not. This is still provided by larger traditional businesses, higher education, and state and local government employers. But many employers have discontinued or dramatically cut back on retiree healthcare benefits while raising costs to retirees. This trend will only continue.
COBRA Extension Healthcare Coverage
If you are leaving a job, you may continue on your prior employer’s group healthcare plan for up to 18 months. Here’s the downside. You have to pay the full cost of the coverage plus possibly a small administrative fee. This can be about $300 to $500 per month for an individual and $700 to $1,000 a month for a family. It’s expensive but it may “bridge the gap” until age 65, when Medicare begins. If you are self-employed during your early retirement (retired or unemployed before age 65), the COBRA premiums are tax deductible.
Individual Healthcare Protection Coverage
You can almost always purchase you own healthcare insurance – it’s just very expensive! You can obtain healthcare insurance from an insurance company or enroll in a managed healthcare plan such as an HMO (Health Maintenance Organization). Coverage is not guaranteed, so you may have to shop around. Coverage is generally comprehensive but get ready for the price! Coverage for an
individual can cost $400 to $700 monthly. Family coverage is in the range of $800 to $1,500 monthly. Again, if you are self-employed, the premiums are generally tax deductible. But you still have co-pays, deductibles and co-insurance payments.
Over 65? Welcome to Medicare!
There are some advantages to getting older! If you are concerned about healthcare coverage, you can now enroll in Medicare. In general, if you qualify for Social Security benefits (retirement, disability and survivors), you are automatically enrolled at 65 even if you have elected to delay retirement. And you may use Medicare to supplement employer sponsored plans.
Medicare is comprised of three parts:
Hospital (Part A)
There is no premium cost for Part A. Coverage pays part of hospital, skilled nursing facilities (not custodial care), home health services, hospice and psychiatric hospitals. There are substantial initial deductibles, co pays and benefit limits.
Medical (Part B)
The premium for Part B is $88.50 monthly. Coverage includes traditional physician and medical procedure expenses. There is a modest annual deductible and you generally pay 20% of covered charges.
Prescription (Part D)
New for 2006, Part D, with monthly premiums that vary based on the plan you select, from about $25 to $40. The plan is complex and many seniors are reluctant to enroll being unsure of the real financial benefit. Still, if you have no other prescription coverage, this can be vital to people with substantial medication needs.
Medicare is, in fact, not a single coverage arrangement. There are several versions and you can select the one best for you.
Original Medicare
This is the, for lack of a better term, the original Medicare plan. Coverage and benefits are restrictive and are best when combined with a retiree healthcare plan from a prior employer. Many others purchase Medigap Plan coverage from a private provider.
Medicare Advantage
Previously called Medicare + Choice, the plans and their cost vary based on where you live. Medicare Advantage (managed healthcare plans) are offered by private companies such as a large HMO or insurance company. Benefits are more generous and co pays often lower than in Original Medicare. Be prepared to pay higher premiums. There are several plan arrangements available under Medicare Advantage – you can learn more about the specific plans available to you from Medicare.
Additional Resources
There is plenty of information and help available. Here are some of the best sources:
U.S Government - Medicare and Social Security – Information about Medicare can be obtained by phone at 1-800-633-4227, by calling Social Security at 1-800-772-1213, via the internet at www.medicare.gov or by visiting a local Social Security Administration office. Their TTY number for people with special speech or hearing needs is 1-800-325-0778.
AARP (American Association of Retired People) – This is the premier advocacy group for Americans age 50 and older. Their information and services are great for anyone thinking about retirement or healthcare. Call AARP at 1-888-OUR-AARP (687-2277) or online at AARP.org.
Robert Skladany is a Human Resources consultant, executive, educator and author. He has focused his career on the issues of mature and retired workers and the particular value they bring to the workplace and to employers in search of stable, productive and positive employees.
