Insurance, Retirement and Medicare in Uncertain Times
In these uncertain times when retirement is right around the corner, health insurance is a common topic that people discuss as they make the decision of “when”. Not having insurance can be costly, but many people misunderstand what options are available for them, both before and during retirement.
These considerations weigh heavily on the minds of people wanting to retire before Medicare coverage kicks in at age 65. Many people put off retirement simply because the cost of an individual health insurance policy is too great on a limited income. (or that’s what they have been told)
What options for health insurance do you have if you choose to retire before age 65? Although they are not required to, you may be able to get COBRA-like coverage from your employer.
As an added retirement benefit, your employer may allow you to pick up the premium on your policy; although paying 100% of your premium may initially appear to be an expensive option, purchasing an individual policy apart from a group may be even more costly and not provide you with the level of coverage you previously had.
Some companies are offering basic high-deductible insurance reasonably in the hopes that they will be able to enroll you in Medicare Part C (supplemental insurance) when you retire.
Another option is to budget and save money to cover your anticipated medical costs for the time period between retirement and age 65. If you are in very good health, this may be a viable alternative for you.
But there are other options offered by independent health advisors who can help find a plan that works for you. Taking into consideration both coverage and cost, there are many options out there if you work with a licensed professional with access to hundreds of plans.
Pre-planning for retirement is an important issue; the earlier you start planning, the better. Realizing the Medicare does not pay all of your medical expenses, you should budget money for medical expenses even after retirement.
Medicare
Medicare is a governmental program which provides medical insurance coverage for retired persons over age 65 or for others who meet certain medical conditions, such as having a disability.
Medicare was signed into legislation in 1965 as an amendment to the Social Security program and is administered by the Center for Medicare and Medicaid Services (CMS) under the Department of Human Services.
Medicare provides medical insurance coverage for over 43 million Americans, many of whom would have no medical insurance. While not perfect, the Medicare program offers these millions of people relatively low cost basic insurance, but not much in the way of preventative care. For instance, Medicare does not pay for an annual physical, vision care or dental care.
Medicare is paid for through payroll tax deductions (FICA) equal to 2.9% of wages; the employee pays half and the employer pays half.
There are four “parts” to Medicare:
Part A is hospital coverage,
Part B is medical insurance,
Part C is supplemental coverage and
Part D is prescription insurance.
Parts C and D are at an added cost and are not required. Neither Part A nor B pays 100% of medical costs; there is usually a premium, co-pay and a deductible. Some low-income people quality for Medicaid, which assists in paying part of or all of the out-of-pocket costs.
For more information or for a FREE quote or discussion about your specific situation, please contact our office at 314-282-7013.