Health Insurance Before Medicare

Looking for health insurance between retirement and Medicare can be daunting! Let’s take a look at what your options are.

Bill Green
Managing Agent of Green Insurance Agency

Health Insurance Before Medicare

Let’s talk about the Elephant in the room for retirees, Health Insurance! The time between retirement and Medicare can be daunting when it comes to your health insurance. You likely have many options: Cobra, Affordable Care Act, Off Marketplace plans, Short Term Medical plans, Health Sharing, and Indemnity plans. Then what about your dental and vision? It is enough to drive the average retiree to madness! Fortunately, you do have options to pick from.

The best way to eat an elephant is one bite at a time! Let’s take these bite by bite.

First, if you are retiring from an employer that offered you health insurance many times they will offer you Cobra for either 18 or 36 months. The nice thing about Cobra is that the benefits will be virtually the same as what you were familiar with while working and your spouse is able to stay on the plan as well. The bad part is that your employer is no longer contributing to the premium. The premiums for Cobra are allowed to be up to 102% of the cost of the plan. These rules apply to your dental and vision plans as well. One thing to keep in mind also is that if you are retiring close to or past age 65, when most people are eligible for Medicare, is that Cobra is not considered Credible Coverage. What that means is that if you maintain your Cobra coverage instead of taking Medicare you could be subject to lifetime penalties and certain times of the year when you can apply.

Next, we have the Affordable Care Act (ACA) these are regulated by the recent healthcare law. They must provide among other things: coverage for pre-existing conditions, free preventative care and are not able to put a cap on the annual benefits. These plans also have the opportunity to qualify for a subsidy through the federal government to reduce your premiums. There are a wide range of premiums based on the plan you pick and coverages, but it could be as low as $0 a month based on what you qualify for. You can purchase these plans yourself through Healthcare.gov or you are able to work with a broker to help with the process. Your coverage and premiums are the same no matter which way you enroll. Many people prefer a local broker to help them through the process, but it is entirely up to you.

Off Marketplace plans function much in the same ways as the ACA plans. They are required to cover the benefits outlined in the healthcare laws, including coverage for pre-existing conditions, free preventative care, and no cap on annual benefits. The big difference though is that these plans do not offer the opportunity for a subsidy to offset premiums so they are generally on the higher end of the monthly premium. These plans are not available through Healthcare.gov. They are only available through brokers

Then we have Short Term Medical plans, these plans do not have the same restrictions and requirements as ACA. The most pronounced being that they do not have to cover pre-existing conditions and require a health questionnaire as part of the enrollment process. That also means that you can be turned down for these plans. Many people choose these because the premiums are substantially lower than an ACA plan if you do not qualify for a subsidy. Nearly all of these plans can be purchased with riders attached that can help reduce or even eliminate your out of pockets if you were to have a serious injury or ailment. These plans like off marketplace must be enrolled through a broker.

Health Sharing programs have become more popular in the past few years, in large part by their attractively low premiums. These do not have to follow the guidelines of ACA coverage and do not offer coverage for prescription medicines. A key part of these plans is that members “share” their medical bills, you may from time to time get a request to help pay another member’s medical expenses. The downside to these plans is that they are not true insurance. Meaning that there is NO Guarantee of payment for your bills. You generally enroll in these plans directly through the company offering it, while brokers are able to offer them many due not due to the fact that it is not a true insurance product.

Indemnity plans have been around for a LONG time but are rarely talked about, they provide you with cash to either pay your bills or help offset lost income. The best-known company that offers these types of plans is Aflac, though there are many others to choose from. These are generally paired with one of the other options mentioned above to help offset your out-of-pocket costs. They provide you with cash to pay your bills for a variety of things including hospital stays, broken bones, ER visits, ambulance rides, cancer diagnosis and more. You can enroll in these plans through an insurance broker

Finally, we come to Dental and Vision Coverage. If you are leaving an employer and they offer Cobra many times you can continue your dental and vision benefits there as well. However, if you do not have that opportunity then there are a plethora of plans to pick from. Shopping for a dental plan the first thing we look out for is if you need work done NOW, if so then you will want to find a plan without waiting periods.The downside to no waiting periods is many times the coverage is not as comprehensive on many services. If you are looking for more maintenance and areOK with a waiting period you are generally able to have more comprehensive coverage on those major services after a 6 or 12-month wait. Vision is a little more straightforward as for benefits and many times can be bundled with your dental plan

I hope with those few big bites we have taken the first steps to take come complexity out of your health insurance options. One last bit of advice. When you go to look at your options for health insurance make sure that the person you are working with is an independent agent or broker and not captive. What that means to you is that a broker can shop and help you enroll with multiple plans and companies based on your needs. Versus a captive agent will only have a small set or maybe even only one company to choose from and they will try to steer you to that since it is the only one they are able to work with

If you would like a personalized no cost and no-obligation analysis of your available options with a health insurance broker I am available by appointment to help you wade through them