Paul Sanchez
If you're retired and need health coverage, you have several options to consider. If you retire before the age of 65 and lose your job-based health plan, you can use the Health Insurance Marketplace to buy a new plan. Losing job-based coverage qualifies you for a Special Enrollment Period, which means you can enroll in a health plan outside of the yearly Open Enrollment Period. You can also change from your current Marketplace plan to another during the Open Enrollment Period. If you have retiree coverage, you can choose to buy a Marketplace plan instead, but you won't be able to get premium tax credits and other savings based on your income. You may also be eligible for Medicare and retiree coverage at the same time, in which case Medicare typically pays first, and your retiree coverage fills in the gaps.
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What You'll Learn
Medicare and retiree coverage
When you retire, your employer, union, or trust may offer you and your spouse health coverage. This is known as retiree health coverage. Depending on the plan, you may need to sign up for Medicare Part A and Part B, or just Part A (you must be eligible for Part B).
Retiree health coverage might not pay some medical costs during any period in which you were eligible for Medicare but didn’t enroll. Therefore, it is important to understand how retiree coverage works with Medicare. You can do this by talking to your job’s benefits administrator. You may also need to enroll in both Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) to get full benefits from your retiree coverage.
If you have both Medicare and retiree coverage, Medicare will pay first for your healthcare bills. Medicare will submit any amount it doesn’t cover to your retiree plan. You can choose to join a Medicare drug plan when you sign up for Medicare Part A and/or Part B. If you choose not to join a Medicare drug plan, you’ll need to have creditable drug coverage to avoid paying a Part D late enrollment penalty.
Retiree insurance is almost always secondary to Medicare, meaning it may provide coverage for Medicare cost-sharing, like deductibles, copayments, and coinsurance. Deciding whether to keep retiree coverage after enrolling in Medicare depends on your costs and anticipated health needs. Retiree coverage premiums can be costly, but it may be worthwhile to keep your plan if you anticipate high Medicare costs. Retiree coverage may also pay for care or other items and services that Medicare does not cover, such as vision care, dental care, and/or off-formulary or over-the-counter prescription drugs.
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Losing job-based coverage
Losing job-based health insurance coverage can be a stressful experience, but there are several options to maintain your health coverage. Here are some important things to know and steps you can take to ensure you remain covered:
Firstly, understand that losing your job-based health insurance does not mean an immediate end to your coverage. In most cases, your coverage will continue until the end of the month in which you left your job. This provides a window of opportunity to explore your options and make arrangements for new coverage.
If you are in the United States, you have the option to enrol in a Marketplace plan through the Health Insurance Marketplace. This option is available regardless of the reason for leaving your job, whether you quit or were fired. To take advantage of this, you must apply for Marketplace coverage within 60 days of losing your job-based coverage. Your new coverage can start as early as the first day of the month after you lose your previous coverage. It is important to note that you may need to provide proof of losing your previous health insurance, and the Marketplace may contact you directly for additional information.
Another option to consider is COBRA coverage. This allows you to continue with your previous employer's health insurance plan for a limited time after losing your job. You can obtain more details about COBRA coverage from the Department of Labor. It is worth noting that COBRA coverage may be more expensive, as you will be responsible for the full cost of the premiums, plus a small administrative fee.
Additionally, if you are nearing retirement age, it is essential to understand how retiree coverage works with Medicare. Your former employer or union may offer retiree coverage, but it might have limitations on what it will pay. To gain a comprehensive understanding, it is recommended to review your plan's description and contact your employer's benefits administrator. You may also want to consider enrolling in Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) to maximise your benefits and ensure all your needs are met.
Lastly, if you have specific questions or complex cases regarding your health coverage, you can always contact the Office of Personnel Management (OPM) or refer to their website, OPM.gov. They can provide guidance and support tailored to your situation. Remember, maintaining your health coverage is important, and there are options available to assist you during this transition.
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Special Enrollment Period
In the United States, a Special Enrollment Period (SEP) is a period of time outside of the yearly Open Enrollment Period when you can sign up for health insurance. You may qualify for an SEP if you meet certain criteria, such as losing your current health coverage, moving, getting married, having a baby, or adopting a child.
For example, if you lose your health coverage through your employer or a family member's employer, you may be eligible for an SEP. This includes losing coverage because you are no longer a dependent. It's important to note that choosing to drop your coverage voluntarily does not qualify you for an SEP; there must be a decrease in household income or a change in your previous coverage that made you eligible for savings on a Marketplace plan.
Additionally, if you are 65 or older and are still covered under a group health plan through your or your spouse's current employment, you may qualify for an SEP for Medicare Part B. This allows you to delay signing up for Medicare without paying a penalty. The SEP for Medicare Part B is available during any month you remain covered under the group health plan, or in the eight-month period after your group health plan coverage or current employment ends, whichever comes first.
It's worth noting that COBRA and retiree health plans are not considered coverage based on current employment, so losing this type of coverage does not qualify you for an SEP. However, if you receive Social Security disability benefits and are covered under a group health plan through your own or a family member's current employment, you may still have special enrollment rights similar to those for workers 65 and older.
Lastly, certain life events may qualify you for an SEP, such as moving to the United States from a foreign country or territory, experiencing the death of someone on your Marketplace plan, or having a change in income that affects your eligibility for Medicaid. These situations are typically evaluated on a case-by-case basis, and you may need to provide documentation to support your request for an SEP.
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Health Insurance Marketplace
The Health Insurance Marketplace is a platform that allows individuals and families to purchase health insurance. It is facilitated by the Affordable Care Act (ACA), which provides special patient protection and makes health insurance more accessible and affordable. There is no income limit to be eligible for the Marketplace, but you must be a US citizen or national, or be lawfully present.
The Marketplace offers a wide range of plans to choose from, including medical, dental, and vision coverage. When you purchase health insurance through the Marketplace, you will receive a Form 1095-A, a Health Insurance Marketplace Statement, which helps you complete your federal individual income tax return. This form outlines the total monthly health insurance premiums paid to the insurance company selected through the Marketplace.
If you are retiring, it is important to understand how your health insurance coverage will work. Your employer may offer health coverage when you retire, and you can speak to your job's benefits administrator to understand how this coverage works with Medicare. You should also ensure that your records show a complete history of your health insurance enrollment for the last five years. You can contact OPM if you have any questions about your retirement health benefits, and they provide online tools and resources to support retirees.
Additionally, when you become eligible for Medicare, you may need to enrol in both Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) to receive full benefits from your retiree coverage. You have a limited time to sign up for Medicare without incurring a penalty, and retiree coverage may not pay your medical costs during any period when you were eligible for Medicare but did not sign up. In some cases, retiree coverage includes extra benefits, such as extended hospital stays.
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Health Savings Accounts (HSAs)
An HSA can be especially useful if you're approaching or entering retirement, as many people underestimate their cost of living, particularly healthcare expenses. You can also use your HSA funds for non-qualified expenses after turning 65, such as a boat or vacation, but you will pay ordinary income tax on those funds.
It's important to note that HSAs are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties. State taxes may apply, and fees may reduce earnings on the account. You can choose to invest your HSA dollars to help grow your balance, and you can combine multiple HSAs into a single account.
To learn more about HSAs and how they work, you can visit Optum Bank's website or contact UMB Healthcare Services, a division of UMB Bank, which provides healthcare payment solutions and HSA administration. Additionally, if you have specific questions about your situation, you can contact the Office of Personnel Management (OPM) or your employer's benefits administrator for guidance.
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Frequently asked questions
Losing health coverage qualifies you for a Special Enrollment Period. This means you can enroll in a health plan even if it's outside the annual enrollment period.
You may have rights to certain health and retirement benefit protections even if you lose your job. If your company provided a group health plan, you may be entitled to temporary continued health benefits until you find a new job. You and your family may also have more affordable or more generous options for health coverage, such as through a spouse's plan, the individual Marketplace, and certain governmental programs.
If you have retiree health coverage, you have different options to consider. You can choose to buy a Marketplace plan instead, but you cannot get premium tax credits and other savings based on your income.
