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After you retire
If you haven't bought long-term-care insurance already, consider it now. The younger you are when you buy the policy, the lower your premiums will be. Plus, it's less likely that you'll have a medical condition that could make it difficult to qualify for coverage.
You'll also need to make new decisions about health insurance when you stop working. If you retire before age 65, you may have a tough time finding affordable coverage on your own until you qualify for Medicare. If your employer doesn't offer retiree health insurance, you may be able to stay on the company policy through COBRA for up to 18 months after leaving your job.
COBRA was the best option for Esther Love of San Antonio. Her husband, Allen, retired in 2003 at age 65 and qualified for Medicare. Esther was only 57 at the time, so she elected COBRA coverage. After that ran out, she had to search for a policy of her own.
Blue Cross rejected her because a colonoscopy had turned up a benign polyp. Two other companies offered policies with monthly premiums of $501 and $560, but they wanted to exclude coverage for conditions related to the polyp. Esther finally found coverage with no exclusions through the Texas high-risk pool for $601 per month, and she's still on the lookout for a better deal.
Because prices and coverage can vary so much, it's a good idea to get help from a health-insurance agent (find one in your area at www.nahu.org). Many states have high-risk pools or laws requiring insurers to continue your coverage even after COBRA runs out, as long as you follow certain procedures (go to kiplinger.com/money/insurance for a link to your state insurance department).
Raising your deductible can lower your premiums. And if your policy has a deductible of at least $1,100 for an individual (or $2,200 for family coverage), you can open a health savings account that lets you use tax-free money to help pay for medical expenses.
Even after you turn 65, Medicare pays only a portion of your health-care costs, and it doesn't automatically cover some big expenses, such as prescription drugs. You have two choices: Buy a medigap policy to supplement Medicare, plus a separate Part D policy for prescription drugs. Or purchase all of your coverage through a private insurer with a Medicare Advantage plan, which can be either an HMO or a regional preferred-provider network (see Medicare That Works to Your Advantage).
Allen Love ended up going with a Medicare HMO from SecureHorizons, a division of UnitedHealth. "It cost much less than any Medicare supplement policy, and the number of doctors and hospitals covered is acceptable, as is the quality," says Allen. And the price can't be beat: Allen pays nothing beyond his Medicare Part B premium because of generous government subsidies to Medicare Advantage plans (use the Medicare Options tool at www.medicare.gov/mppf to compare prices).
After you retire, other insurance takes a back seat to health-care coverage. But it pays to tell your other insurers when you stop working. Your auto-insurance rates may drop when you no longer use your car to commute. You may qualify for a retiree discount on your homeowners insurance because you're likely to be spending more time in the house. And you probably don't need life insurance anymore, unless you want to protect your spouse because you have a life-only pension that will end after your death.
Checklist for Retirees
Notify your homeowners and auto insurers when you stop working. You may qualify for lower rates and discounts.
Get help from a health-insurance agent if you need to buy coverage on your own. Supplement Medicare with a medigap policy or by joining a private Medicare Advantage plan.
Consider buying long-term-care insurance, if you haven't already.
