Health Care After Retirement

One of the most complex and confusing issues you will face in retirement is managing your health insurance. This is a complex question that you will need to research carefully. It’s also subject to change, so make sure you have the most up-to-date information. First, what health care coverage do you and your family have at your workplace, and will your employer continue to provide coverage after you retire, or for a short period of time, or for the rest of your life? If your company has a human resources department, the staff there will have all the resources to advise you. If your business is small, talk to your boss right away. Don’t wait for the last moment; give yourself time to prepare your choice. Most likely, you will lose your business insurance; Fewer than a third of large US companies offer retiree health insurance (compared to 66% in 1988), and less than 10% of smaller companies 200 employees provide pension insurance. If you work for the US federal government, you’re in luck – you and your family can keep your insurance, even though you’ll continue to pay the actual cost. Medicare is a US government reimbursement program that provides health care insurance for retirees age 65 and older, as well as some people with disabilities. Medicare is paid for by deductions from wages paid by all US taxpayers during their working lives (at 2.9%, which workers share 50/50 with their employers ; ie, say you pay 1.45% of your salary and your employer pays the remaining 1.45%. Part of Medicare is paid for through co-payments and co-payments. As a retiree, you don’t have to contribute to the Medicare system; Medicare is deducted only from earned income, which does not include Social Security, pensions, or investment income. However, some parts of Medicare will require you to pay monthly premiums even in retirement. And if you continue to work in retirement, your salary or wages may be subject to the 2.9% Medicare tax. Medicare is divided into four main areas. Part A covers patient care in hospitals, as well as professional nursing, health care and some home health care. This portion is the Medicare tax you paid during your working life; you will be automatically enrolled at age 65. Part B covers physician services, hospital care and certain hospitals, and some types of home care. Part B also covers some preventive services, either to improve your health or to monitor any chronic diseases you may have. Part B coverage is optional and requires a monthly premium of about $100. Part D is a prescription drug option that covers part of the cost of prescription drugs; There are many options under Medicare Part D, and all options require payment of a premium and co-payment or coinsurance for each prescription you fill. And Part C refers to “Medicare Benefit Plans”: health plans licensed by private insurance companies that are licensed by Medicare. Because Medicare does not cover all events, there are various supplemental plans available to Medicare beneficiaries; These supplement plans are often called “Medigap” insurance because they fill the “gap” between Medicare Support services reimbursement and actual costs. Before applying for Medigap coverage, you must be enrolled in Medicare Part A and Part B. Different Medigap plans are organized into ten different plans, each offering different options; They are all sold and managed by private insurance companies. Almost 20% of Medicare enrollees also enroll in Medigap policies. If you retire before age 65 and your employer doesn’t provide you with insurance, you have a few options. COBRA is a law that allows people who retire before age 65 to continue their employer-provided coverage for up to 18 months. However, if your employer paid part of your coverage while you were working, that coverage will end at retirement and you must pay the full COBRA premium. Your employer, who will continue to maintain your policy through a group policy during the COBRA coverage period, may charge you an additional 2% for processing fees. However, your basic income should not be increased, because the same plan covers you as the employer will cover you.

COBRA coverage can be extended beyond 18 months if the beneficiary is determined to be disabled. These extensions only last for another 11 months, and your single employer health plan can charge you up to 150% of your premium cost during the extension period.