Your goals and priorities will probably change as you plan to
retire. Along with them, your insurance needs may change as well. Retirement is
typically a good time to review the different parts of your insurance program
and make any changes that might be needed.Stay well with good health insurance
After you retire, you'll probably focus more on your health than ever before. Staying healthy is your goal. That may require more visits to the doctor for preventive tests and routine checkups. There's also a chance that your health will decline as you grow older, increasing your need for costly prescription drugs and medical treatments. All of this can add up to substantial medical bills after you've left the workforce (and probably lost your employer's health benefits). You need health insurance that meets both your needs and your budget.
Fortunately, you'll get some help from Uncle Sam. You typically
become eligible for Medicare coverage at the same time you become eligible
for Social Security retirement benefits. Premium-free Medicare Part A
covers inpatient hospital care, while Medicare Part B (for which you'll pay a
premium) covers physician care, laboratory tests, physical therapy, and other medical
expenses. But don't expect Medicare to cover everything after you retire. For
instance, you'll have to pay a large deductible and make co-payments for
certain types of care. Medicare prescription drug coverage is only available
through a managed care plan (a Medicare Advantage plan), or through a Medicare
prescription drug plan offered by a private company or insurer (premiums
apply).
To supplement Medicare, you may want to purchase a Medigap policy.
These policies are specifically designed to fill the holes in Medicare's
coverage. Though Medigap policies are sold by private insurance companies,
they're regulated by the federal government. There are 12 standard Medigap
plans, but not all of them are offered in every state. All of these plans
provide certain core benefits, and all but one offer combinations of additional
benefits. Be sure to look at both cost and benefits when choosing a plan.
What if you're retiring early and won't be eligible for Medicare
for a number of years? If you're lucky, your employer may give you a retirement
package that includes health benefits at least until Medicare kicks in. If not,
you may be able to continue your employer's coverage at your own expense
through COBRA. But this is only a short-term solution, because COBRA coverage
typically lasts only 18 months. Another option is to buy an individual policy,
though you may not be insurable if you're in poor health. Even if you are
insurable, the coverage may be very expensive.
Don't
overlook long-term care insurance
If you're able to stay healthy and active throughout your life,
you may never need to enter a nursing home or receive at-home care. But the
fact is, many people aged 65 and older will require some type of long-term care
during their lives. And that number is likely to go up in future years because
people are increasingly living longer. On top of that, long-term care is
expensive. You should be prepared in case you do need long-term care at some
point.
Unfortunately, Medicare provides very limited coverage for
long-term care. You may be covered for a short-term nursing home stay
immediately following hospitalization, but that's about it. Other government
and military-sponsored programs may help foot the bill, but generally only if
you meet strict eligibility requirements. For example, Medicaid requires that
you exhaust most of your assets before you can qualify for long-term care
benefits. Even a good private health insurance policy will not offer much
coverage for long-term care. But most long-term care insurance (LTCI) policies
will.
LTCI is sold by private insurance companies and typically covers
skilled, intermediate and custodial care in a nursing home. Most policies also
cover home care services and care in a community-based setting (e.g., an
assisted-living facility). This type of insurance can be a cost-effective way
to protect yourself against long-term care costs--the key is to buy a policy
when you're still relatively young (most companies won't sell you a policy if
you're under age 40). If you wait until you're older or ill, LTCI may be
unavailable or much more expensive.
