Alternatives for Retiree Health Benefits

You’ve worked hard and now it’s time to relax, travel, learn a new skill, or tackle that novel you began years ago. Of course, as you know, before you do any of that, it’s important to make sure your finances are in order. A big part of those finances is health insurance, because health care costs are not something to be taken lightly at any age.

Early Retirement

If you’re 65 or older, generally, Medicare is available for people in your age group. However, because retiring early is something many people aspire to do, you’ll need to consider other options if you plan on leaving the work force early.

If you retire early, Medicare probably will not be an option for you before the age of 65. If you decide to simply purchase health insurance from the marketplace, the costs can really add up. Don’t worry; there are several alternatives to insurance for you to consider:

• Get on your spouse’s employer-sponsored health plan

  This only works if your spouse is still employed and has health insurance. If you retire together, this option probably will not be applicable to you.

• Get a part-time job that offers health insurance

  Banks, credit unions, hospitals, county and municipal governments, colleges and universities, insurance companies, airlines, and some grocery store chains often offer health insurance to their part-time employees. Do some investigating and consider working part-time for cushion income and health insurance.

• Have a part-time business and deduct your health premiums

  Those who are self-employed may be able to deduct the cost of their health insurance premiums. While this won’t let you get cheaper health insurance coverage, you may be able to get a tax deduction to help recover those more expensive costs. We encourage you to consult a professional tax advisor for advice.

• Find the cheapest health plan you can and set up a Health Savings Account (HSA)

  If you buy a plan with a low premium and high deductible, you can help fill the deductible gap with a Health Savings Account (HSA). You can contribute up to a certain amount that is tax-deductible. Review your plan closely as there are typically some restrictions with HSA accounts.

• Keep a low income in early retirement and maximize the health insurance tax subsidy

  If you can make a lower income work, this could make a big difference in your monthly health insurance premium. Consult a professional tax advisor for more information.

 

Medicare-Eligible Retirees – Alternatives to Traditional Group Coverage

Maybe you’re on a retiree group plan but still looking for alternatives.

According to willistowerswatson.com, “Over the last decade, plan sponsors of traditional retiree group health coverage have increasingly turned to private Medicare Marketplaces and Employer Group Waiver Plans (EGWP) to find better value for their Medicare-eligible retirees.” Private Medicare Marketplaces offer a collection of individual Medicare plans to retirees, and include Medicare Supplement insurance, Medicare Advantage, and Medicare Part D prescription drug plans. These plans have similar benefits to traditional retiree group coverage and have competitive prices. EGWPs – group Medicare Advantage plans and Part D EGWPs – can be offered to employer groups because certain requirements are waived. Willistowerswatson.com goes on to note that both Private Medicare Marketplaces and EGWPs can offer some savings compared to traditional retiree group coverage, “but greater value can often be realized through a Private Medicare Marketplace.”¹

Do your research

There are different options out there for health insurance in your retirement years. We encourage you to do some research and consider your personal circumstances. Perhaps you can even talk to a financial advisor to help find the best option for you.

Sources:
1. Willis Towers Watson, Alternatives to traditional group coverage for Medicare-eligible retirees, accessed August 2021