As more baby boomers are entering their late 60s, retirement is a major concern, but before they leave the work force, they should plan for their post-retirement health care coverage along with other costs, according to Allsup, a nationwide provider of Medicare plan selection services.
Health care costs in retirement are a top concern for many seniors, says Paula Muschler, operations manager of the Allsup Medicare Advisor. There is a lot they can do, either right or wrong, that can have a lasting impact on their health care costs in retirement.
Since the recession, many baby boomers have put off retirement, and health care costs could also be a factor in this delay, Allsup finds. According to a 2013 Gallup survey, of the workers ages 58-65, more than 50% say they anticipate retiring after age 65. For workers of all ages, they expect to retire at 66, up from 60 in 1995.
Your retirement age has a significant impact on your health care coverage options in retirement, Muschler says. Its important to start planning for this well in advance of retiring so that you have taken the steps needed to ensure you have health care coverage on your first day of retirement.
Often, baby boomers find researching options and regulations is intimidating, particularly for those with employer-sponsored coverage, Muschler says. For those retiring at 65, they should look into whether their employers offer retiree health care coverage as it affects Medicare plan choices. After moving to Medicare, dependents on the employer-sponsored coverage may need to look at other options, including private health coverage.
Retirees also need to decide between Original Medicare with prescription drug Part D plans and possibly Medigap supplemental coverage or a Medicare Advantage plan, according to Allsup. When turning 65, retirees can enroll in Medicare three months before or after their birthdays as well as the month of their birthdays. However, there could be a gap in health care coverage if the enrollee waits until after his or her birthday. If the enrollee waits too long, he or she could receive penalties for their Part B and Part D coverage.
For those retiring after 65, if they took the right steps to implement Medicare coverage with their employers at 65, there should be no penalties upon retirement, Allsup states. A special enrollment period is available to those who did not enroll in Plan B when they were first eligible because they already had employer-sponsored coverage. While Medigap helps with supplemental coverage, it has separate rules from Medicare, and a retiree may want to consider talking to a specialist to review options.
Workers retiring before age 65 are not eligible for Medicare. Instead, they could enroll in a spouses plan or COBRA or purchase private health insurance, according to Allsup. Once eligible, retirees should enroll in Medicare and not wait.
Early retirees may like their COBRA coverage and, therefore, decide to stay on it until it expires, even if that is after they turn 65, Muschler says. But this can lead to late-enrollment penalties when they do go to enroll in Medicare.
