- What if you retire before Medicare eligibility?
- What if your health insurance terminates because of voluntary or involuntary termination of employment?
- How can you protect against the financial effects of becoming sick or disabled?
- What financial protection is available if you or your family member should die prematurely?
- How can you protect against the financial consequences of requiring assisted living or nursing home care?
- What is a health savings account (HSA)?
- What is the difference between a managed-care plan and consumer-driven plan?
- What should you know if you have multiple residences or travel frequently?
Early retirement offers a number of lifestyle advantages, but you should be aware of the healthcare related issues. You will not be eligible for Medicare coverage until you reach age 65. If you are considering retiring before you are eligible for Medicare, you may want to consider buying private healthcare insurance or electing healthcare continuation through your employer's active health plan under a federal law known as COBRA. If you choose the latter, you will be expected to pay the full cost premium paid by your employer. However, since the COBRA premium is a group rate, it's generally more economical than purchasing an individual health insurance policy.
For information on health and medical insurance, visit ehealthinsurance.com/ which provides insurance options for individuals, families, and small businesses.
To learn more about COBRA, visit the U.S. Department of Labor.
Top What if your health insurance terminates because of voluntary or involuntary termination of employment?It's important not to have lapses in your healthcare coverage, even when you are unemployed. If you experience a termination of employment, consider electing continued healthcare coverage from your former employer under the Federal law known as COBRA. Keep in mind, however, that you will pay the full premium cost plus an administrative fee. In general, COBRA is available to the primary insured employee and his/her insured dependents at retirement and termination of employment; and to insured dependents under age 65 at the death of the primary insured, divorce, attainment of the maximum age for a dependent child, or attainment of age 65 of the primary insured when there is a corresponding loss of healthcare coverage under the employer's health plan.
To learn more about COBRA, visit the U.S. Department of Labor.
If your company employed fewer than 20 people, you may be eligible for certain state programs. Contact your state's insurance department for coverage information.
TopHow can you protect against the financial effects of becoming sick or disabled?
An extended disability, whether due to illness or injury, can be financially difficult and without adequate insurance, your savings could potentially be depleted and your home could be at risk. Purchasing a disability income policy, either through an employer benefits package or on an individual basis, is one way to help protect against financial loss. There are many reputable companies that offer both short- and long-term disability income insurance products.
If an illness or disability leads to the loss of employer-provided health insurance, you may be eligible to elect continued healthcare coverage from your employer under the Federal law known as COBRA, due to a reduction in hours of employment. To learn more about COBRA, visit the U.S. Department of Labor.
- To protect against an illness or disability leading to a long-term care situation, you may want to consider long-term care insurance. Learn about long-term care insurance.
What financial protection is available if you or your family member should die prematurely?
Making sure your family would be financially secure if something happened to you is an essential aspect of financial planning. By replacing lost earned income, providing resources to pay for domestic services, eliminating debts and/or completing savings plans, life insurance proceeds can help maintain your family's standard of living should something happen to you. Life insurance is widely offered by employers as a benefit; however, keep in mind that the amount of coverage offered may not be adequate for your family's needs.
- Learn about long-term care insurance.
Also, be aware that if you are covered by an employer's health benefits package at the time of death, continued eligibility for healthcare coverage is available to survivors under the Federal law known as COBRA. Talk to your employer to find out more.
TopHow can you protect against the financial consequences of requiring assisted living or nursing home care?
Long-term care services, especially assisted living and nursing home facilities, can quickly deplete your retirement assets. Although costs for long-term care vary greatly depending on where you live and the setting in which it's received, you can safeguard yourself financially by purchasing long-term care insurance. Having a long-term care policy protects your assets and provides resources to mitigate the financial and emotional distress your need for long-term care can create for family members.
- Learn about long-term care insurance.
Several states offer a long-term care "partnership" plan. A partnership plan allows you to retain some of your assets before turning to Medicaid for long-term care support. For instance, if you purchased a policy with a $100,000 benefit, you would be allowed to retain $100,000 in assets yet still be eligible to qualify for Medicaid coverage of your nursing home care costs. Your long-term care insurer can provide more details based on your state of residence.
Top What is a health savings account (HSA)?A health savings account (HSA) is a tax-advantaged trust or custodial account used in conjunction with a high deductible health plan (HDHP) that eligible individuals may establish to pay for current and future qualified medical expenses.
Health savings accounts were created under the Medicare Prescription Drug, Improvement and Modernization Act of 2003. As HSA allows eligible individuals to make tax-advantaged contributions, and take tax-free distributions to pay for current and future qualified medical expenses.
To establish an HSA, you must be an eligible individual and meet the following criteria:
- You must be covered by an HDHP
- You cannot be covered by any other health plan that is not an HDHP
- You are not currently enrolled in Medicare
- You cannot be claimed as a dependent on another person's tax return
To learn more about HSAs and high deductible health plans, you can review the guidelines provided by the Department of the Treasury (PDF), see IRS Publication 969(PDF), or go to Vimo.com
Top What is the difference between a managed-care plan and consumer-driven plan?The major differences between the two types of plans involve cost and access to doctors. Keep in mind that a consumer-driven health plan is often a high deductible health plan (HDHP) and frequently offers the opportunity to set aside additional amounts of money through a health savings account (HSA). Saving through an HSA to meet current and/or potential health costs for later years, including retirement, can be advantageous, but evaluate your situation to make the best decision for you and your family.
| Managed Care Plan | Consumer-Driven Plan | |
|---|---|---|
| Premium Cost | High | Low |
| Co-pay/Deductible | Low | High (but most plans cover the costs of preventative care) |
| Choice of Doctors | Limited (permission required to see doctors outside of the plan) | Unlimited |
| Choice of Hospitals | Limited (permission required to see doctors outside of the plan) | Unlimited |
Many managed care plans, including Medicare Advantage, only reimburse care from a defined group of physicians or hospitals, or require that you pay substantially more of the cost of care for services delivered from out-of-plan providers. If you have multiple residences or frequently travel beyond your range of in-plan care, you'll want to explore options for healthcare services before you need to use them. Many Medigap plans will provide coverage during foreign travel. See Medigap & Other Supplemental Coverage for more information.
TopGet more information on Medicare Advantage as well as other types of plans at www.medicare.gov/choices/overview.asp
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- Learn about long-term care insurance.
- Help ensure you have income for as long as you live—consider an income annuity.
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Learn about Medigap & other supplemental coverage.
