Healthcare is one of the biggest expenses in retirement, and if you’re one of the many Americans who’ve had subsidized health coverage through your employer, planning for healthcare costs after retirement becomes even more important. Let’s break down the options you have for healthcare coverage when you retire.
The Healthcare Marketplace
If you’re planning on retiring before age 65, healthcare coverage becomes a priority. That’s because you won’t be eligible for Medicare until you hit 65, unless you’re disabled and qualify for Social Security Disability Insurance (SSDI). If that’s the case, you can start receiving Medicare after a 24-month qualifying period.
But what if you’re not disabled? Well, you have the healthcare marketplace to explore. This marketplace, created by the Affordable Care Act (also known as Obamacare), allows you to shop for a health insurance policy. The cost of your insurance will depend on your income, and prices can vary dramatically depending on which state you live in.
Plans come in different “metal” levels—bronze, silver, gold, and platinum—which refer to your out-of-pocket costs and coverage level. The higher the metal level, the more the plan covers and the higher the monthly premium. While bronze plans are cheaper, they typically offer less coverage. If you can afford it, you’ll probably want to opt for at least a gold plan to ensure you’re covered for most of your healthcare needs.
One key tip: If you can keep your income lower in retirement, you might save money on your monthly premiums, both through the marketplace and when you become eligible for Medicare.
Medicare: Not as Simple as You Think
When you turn 65, you’ll likely be eager to sign up for Medicare thinking you’re set for healthcare. But here’s the catch: Medicare doesn’t cover everything. There are different parts of Medicare (A, B, C, D), and each covers a different aspect of your healthcare. You might find that you need Medigap insurance to help cover deductibles and out-of-pocket expenses.
Even with Medicare, there are some out-of-pocket costs to consider, so a Health Savings Account (HSA) can be a great way to save for these expenses and stretch your dollars further.
The Bottom Line: Get Expert Help
As you near retirement, healthcare can feel overwhelming, but you don’t have to navigate it alone. Whether you’re considering options for marketplace insurance or Medicare, or trying to figure out how to plan for future healthcare costs, a CERTIFIED FINANCIAL PLANNER™ can help. Talking through your options can make all the difference in ensuring you’re covered when you retire.