HEALTH INSURANCE

Health insurance is a major concern for retired folks. Once a person reaches 65, he/she is eligible for Medicare which can be quite costly.
In addition to Medicare, one needs supplemental insurance for whatever isn’t covered with Medicare. This supplemental insurance can also be quite costly.
Some companies provide health care insurance to its retirees but this is becoming very rare. If you are under 65 and have no bad habits or health conditions, you can find affordable health insurance but be aware that the premiums rise as you grow older.
If you plan to retire before reaching 65 and know that you will have to provide your own health insurance, you should try to get as healthy as possible. Lose weight, exercise, stop any bad habits and so on so that your premiums will be as low as possible in the beginning.
Access to affordable health insurance is crucial for maintaining the retirement income security of many retirees. In examining four groups of people age 55 and older—near-elderly employees (people between the ages of 55 and 64 who are still in the workforce); near-elderly retirees (those between 55 and 64 who have retired from the workforce); elderly employees (people 65 and older who are still in the workforce); and elderly retirees (those age 65 and older who have retired)—some trends in health coverage for these groups begin to emerge.

• People age 55 and older are disproportionate users of health care because they have more frequent and more severe health problems than younger, healthier people.

Deteriorating health is often a powerful incentive for older workers to retire. However, in recent decades, health care costs have risen two to three times faster than inflation. Inadequate health insurance coverage puts working families at risk of going without the health care they need in retirement.

• Prescription drug coverage is declining for most of the 55-and-over population, and the gap between health insurance and prescription drug coverage increases with age and retirement.

Because early retirees do not qualify for Medicare, and because Medicare does not include certain benefits such as prescription drugs, many retirees must turn to private health insurance. Although private health insurance can be accessed either through an employer or by purchasing a non-group plan in the private market, the latter option is likely to be prohibitively expensive or simply not available.

This leaves retirees to a large degree dependent on their former employers offering retiree health insurance. The share of retirees 55 and older who had part or all of their prescription drugs covered by insurance declined systematically and substantially from 1996 to 2000. The evidence suggests that older workers may stay in the labor force longer in order to maintain prescription drug coverage.

• Fewer employers are offering retiree health insurance.

Firms are reducing access to retiree health care because employers are looking to limit rising health care costs. In 1988, 66% of large firms (those with more than 200 employees) offered health coverage to retirees, compared to 34% in 2002. Among small firms with less than 200 employees, only 5% offered employer-sponsored health insurance (ESI) in 2002.

The coverage is out there, you just need to explore all of your options and then go from there.
When you retire – even before you retire – you should join AARP, American Association of Retired Persons. AARP provides countless benefits for its members including low-cost health insurance. They also offer discounts on dental insurance as well as vision coverage.

AARP has a small membership fee that is well worth the annual investment. We’ll cover AARP more in-depth at the end of the book, but when it comes to health insurance and you can’t get Medicare coverage or you want additional coverage, AARP is one of the best ways to go.

Finally, you need to start thinking about a will.