Retirement Health Insurance

Most Americans get their health insurance through their employers, so retiring usually means giving up a company-sponsored health insurance plan. To replace this loss of health insurance, the federal government offers Medicare.

Medicare is a federal program designed to provide benefits that reduce the cost of healthcare for those who have reached full retirement age or who have other covered disabilities. There are two main types of Medicare that you can choose from: Original Medicare and Medicare Advantage. Whichever plan you choose, make sure to sign up for Medicare three months before you reach full retirement age. Applicants pay a higher premium if they delay coverage.

The traditional form of Medicare, this consists of two parts. Part A, free to most people who have worked for 10 years or more, covers a portion of the fees incurred during hospital stays. Part B, which costs most retirees $93.50 per month (in 2007), helps pay for doctor visits and associated lab procedures. Medicare does not cover many additional healthcare costs, such as dentist or eye doctor visits, or most prescription drug costs.

To cover the costs of prescription drugs, you can sign up for a Medicare Prescription Drug Plan, or Part D, which is offered through private insurers that help to cover the costs of prescription drugs. Cost and coverage vary by plan.

In these plans (called Part C), Medicare pays your monthly premium to a private insurer who enrolls you in its health insurance plans. Many of these insurers cover more services than Original Medicare, have lower copayments, and some offer prescription drug coverage. Consider Medicare Advantage plans carefully, as many require you to use only their doctors and can include other restrictions. If you choose a Medicare Advantage plan, you may not be able to rejoin Original Medicare.

If you elect to go with Original Medicare, you may want to get Medigap. Medigap plans are private insurance plans that cover health costs that Original Medicare doesn’t. Medigap providers are limited to offering 12 standardized plans, which have different premium costs and degrees of coverage.

Long-term care (LTC) insurance covers some or all of the costs of full-time rehabilitative and/or ongoing nursing care for patients who need help with the activities of daily living, such as dressing, eating, and bathing. LTC insurance becomes increasingly expensive as you age past 60 and may be impossible to get entirely once you reach a certain age. It’s generally best to get long-term care insurance before you turn 60, even if any care you may need seems a long way off. (For more details on long-term care insurance, see the Quamut guide to Insurance, available in Barnes & Noble bookstores and online at www.quamut.com.)