Navigating Healthcare When You Retire

Securing a Health Care Plan in retirement can be a challenge if you retire before age 65 and are Medicare eligible. If you are under 65, there are typically two options available. First, you can continue on your employer’s health insurance (assuming you had an employer who offered health care) for up to 18 months. This is called COBRA. With COBRA, you will pay 102% of the premium—the full cost of the insurance plus a 2% administrative fee. Second, you can obtain your own coverage through the marketplace paying the going rate and keeping that coverage until you are Medicare eligible at age 65. Note that with the first option, the 18 month COBRA period may not take you to age 65 so you might still need to obtain your own policy for some period of time.

Once you reach age 65, you will be eligible for Medicare. However, you should enroll for Medicare approximately 90 days before turning 65. If you have not yet begun Social Security, you will receive a quarterly bill from Medicare. If you have started receiving Social Security, your Medicare premium will be deducted automatically from your monthly benefit. Part A is free; Part B comes with a cost that is generally based on your income from two years prior. If your income from the prior two years was significantly higher than the current year, you can appeal to Medicare to reduce the premium. No guarantees that they will lower it, but you can try.

In addition to Medicare, most people also obtain a Medigap policy (supplemental insurance) which covers a lot of what Medicare doesn’t (but not dental, long-term care, hearing aids, eyeglasses, and a variety of other items). The cost will vary depending on the policy selected, and they are identified by letter—A through N (although E, H, I and J are no longer available). Each has different features and benefits and your personal situation will determine which is best for you.

Finally, there’s Medicare Part D—the prescription drug plan. Again, this comes in a variety of flavors and the one you select will depend on the medications that you use. Pharmacies can help determine which plan is best for you, and you can also go to www.medicare.gov to help you determine which plan best meets your needs.

Health care in retirement can be complicated. Please make sure that you work with your Wealth Manager as you approach retirement in order to map out the options that are best suited for your unique circumstances. For additional information, the Medicare website has a great—though not short—guide to the program here.

Mindy Gasthalter
About Mindy Gasthalter
Mindy’s financial planning skills are honed over 26 years in the industry. She graduated from Golden Gate University with a Master's in the field of financial planning. She had worked at a financial firm in Alexandria, Virginia before coming to worked at Pinnacle Advisory Group in 2004. She works with clients regularly, often drafting and presenting retirement plans and portfolio reviews. During her years, many of her clients have become personal friends and these personal connections make her job particularly gratifying. Mindy is a Registered Paraplanner (RP®) and Certified Financial Planner (CFP®) for Pinnacle Advisory Group.
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