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What Does Health Insurance Cost In Retirement

As advancements in medicine and lifestyle improvements have led to longer life expectancy in the United States, health insurance in retirement has become a hot topic in recent decades. Even though America’s healthcare system is able to offer seniors better care than ever before, this demographic is still statistically more likely to require frequent medical care.

For many Americans, health insurance is obtained through an employer-sponsored program. These health insurance plans may be paid for entirely by the employer or costs may be split between the employer and the employee. Such an arrangement works out well for most, but what happens when you stop working? Can you still carry your employer’s health insurance plan into retirement? Do you have to purchase a private health insurance plan?

Continuing Your Existing Employer-Sponsored Coverage

For most people, an employer-sponsored health insurance plan is only available while working for the providing employer. This means that you will not be able to continue carrying the same coverage through the same plan if you retire.

You may be able to continue paying for your current health insurance plan through the Consolidated Omnibus Budget Reconciliation Act (COBRA). This Act allows workers to continue paying for a health insurance plan after separation, but there are time limitations in place regarding the continuation of coverage. Additionally, COBRA plans may cost more than you currently pay through your employer.

Medicare May Be the Solution

While you can certainly purchase your own health insurance in retirement, seniors often turn to Medicare for coverage. Medicare is a government health insurance program that provides access to coverage for Americans over the age of 65; however, some people may take part in Medicare under the age of 65 if a disability qualifies them for the program.

Original Medicare is broken into separate parts: Medicare Part A, Part B, Part C and Part D. Generally speaking, Part A covers inpatient care, Part B covers outpatient care, and Part D covers prescription medications. Medicare benefits under Part A are generally available at no premium cost to the recipient since they have already been paid for through payroll deductions while a recipient was working. Medicare Part B requires a monthly premium in order to carry this coverage, and co-pays and deductibles usually apply. Medicare Part D is optional coverage that may also require a premium as well as co-pays. Part C includes Medicare Advantage plans sold by private insurance companies that contract with Medicare to provide your Part A and part B benefits, along with additional coverage.

Medicare Advantage Plans May Offer More

Original Medicare is the base solution that works for many retirees, but Medicare Advantage plans are also an option. A Medicare Advantage plan offers the same Medicare benefits of Original Medicare, but these types of plans provide additional benefits as well. Some Medicare Advantage plans may cover dental and vision hearing exams, and prescription drug coverage, and additional services like gym memberships that are not included with Original Medicare.

Long-Term Care in Retirement

Something else to think about regarding health insurance and retirement is the possibility that you will need long-term care at some point. Long-term care facilities are usually those that provide residential accommodations in addition to medical care. Unfortunately, Medicare does not cover this type of long-term custodial care.

Medicare does, however, cover admission to hospitals or skilled nursing facilities for limited periods of time. If you are admitted, your first 60 days are covered at 100%. After 60 days, your next 30 days are covered at a discounted rate. Beyond 90 days, you can utilize lifetime reserve days to receive care at a discount. If no lifetime reserve days are available, you then become responsible for all costs.

If you reside in a long-term care facility, Medicare will not cover your expenses. Some private insurance plans do cover this type of care, and others sell long-term care insurance as a separate and specific policy. If you’re anticipating the need for long-term care in your future or you simply want to be prepared, seeking out a private healthcare insurance policy is likely going to be your best bet, even if you also have Medicare coverage.