Home » Business & Finance » Retirement Planning » Paying for Your Health After 65

Paying for Your Health After 65

© Ann Needle

Those who want to retire early and keep down health care costs have their work cut out (see my previous two articles). But if you plan to wait until normal retirement age before leaving work, you still have the task of buying the best health coverage for your needs without spending extra dollars - but with more options. In a nutshell, here's some help in sorting through the major health coverage choices.

Retiring at 65 or later means you can choose your employer's or union's plan (if available) or Medicare. If you have the option of group coverage, consider it carefully! Group plans usually won't take you back if you drop them for Medicare, and are often a better deal. But, even if your group policy "drops" you unexpectedly later on, in that case Medicare will welcome you without cost or health restrictions.

Make Your Way Through the Medicare Maze

If you select Medicare, you can receive benefits either through the fee-for-service (traditional insurance) delivery system or through a managed care plan such as a health maintenance organization (HMO). In either case you receive Medicare Part A at no cost, which covers most hospitalization and some skilled nursing care when required after hospitalization. Medicare Part B covers most doctors' fees and outpatient treatment, and charges a monthly premium, which is $45.50 in 1999. You also pay any deductibles and copayments with Part B, as you would with fee-for-service private insurance.

Medigap insurance - which supplements parts A and B - can help pay medical expenses not covered by the Medicare system, including long-term nursing home care beyond one month. You can usually choose from 10 standardized Medigap policies with differing costs and services.

The drawback to Medigap is its expense - a 68-year-old married couple could pay $6,500 or more yearly for a policy with lifetime benefits of $100 per day per person for nursing home care, and $50 a day per person for home health care.

Medicare Managed Care - Should You Bother?

A cheaper alternative to Medigap may be a Medicare managed care plan. These days, that means knowing exactly what you need from your health care, and shopping VERY carefully.

You probably know all about how managed care plans that have been exiting the Medicare system since last year, complaining of low government reimbursements. In light of this, why would you want to sign up with any of the remaining plans? There are reasons.

First, Medicare managed care may be more cost efficient than Medicare fee-for-service if you are in fairly good health and don't anticipate highly specialized care that may require turning to medical specialists. That's because you generally must seek care only from a pre-approved list of professional and facilities, or risk not having your treatment covered.

The copyright of the article Paying for Your Health After 65 in Retirement Planning is owned by Ann Needle. Permission to republish Paying for Your Health After 65 in print or online must be granted by the author in writing.