Smart Management of Retirement Income—Health Care Costs

Health Insurance


Health care costs are likely to be one of the biggest expenses of retirement. Most individuals become eligible for Medicare at age 65. This means you need to get health insurance coverage somewhere else when you retire at an earlier age. Check whether your employer offers a retiree health insurance program as part of your retirement benefits, or if you can convert what you have to an individual policy.


You may also be eligible to get health insurance at group rates from your former employer under COBRA—a federal law that typically entitles you to continue your employer’s coverage for up to 18 months. You will likely, however, have to pay the full cost for coverage plus, possibly, an administrative fee. To be eligible for COBRA insurance, you must have been enrolled in your company's health plan while employed. You must also elect to take COBRA coverage once you have been notified that you are eligible by the later of the 60th day after the written notice is sent or the day your health coverage ceases under the company's health plan. If you fail to respond, you and your family will lose your right to COBRA benefits. To get COBRA coverage, you must pay the premium that you were already paying plus the amount paid by the company on time or risk losing your health insurance.


In addition to COBRA, you may have other options to get health insurance. For instance, if you are married and your spouse continues working after you retire, you may be able to get health insurance under your spouse's company health plan, if one is available. You should also check your options under the 2010 Patient Protection and Affordable Care Act. Under that law, you may be able to obtain health coverage as you retire, even if you opt to get COBRA coverage for a period after you retire or when the COBRA benefit ends. You can find details on the Health Insurance Marketplace website. Compare the benefits and the cost of all available options so you can decide what health insurance works best for you.


Smart Tip:

Visit the National Association of Insurance Commissioners' website for additional information on health insurance options.


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