Senior Insurance Options: Peace Of Mind At 62

If you're 62 and thinking about retiring, it's important to know what health insurance options are available to you. In the US, Medicare is the federal health insurance programme for people aged 65 or older, as well as some younger people with disabilities, and those with end-stage kidney disease. So, if you retire at 62, you won't be eligible for Medicare until you turn 65. However, there are other insurance options to consider. You may be able to get health insurance through your employer, or your spouse's employer. You could also look into private-sector insurance companies, or the Affordable Care Act (ACA) health insurance marketplace. If your income is low, you may be eligible for Medicaid.

Private individual coverage

The benefit of purchasing a commercial policy is that you can buy any plan that fits your budget and medical needs. However, these plans can be expensive. You won't have access to any premium tax credits or subsidies available through the Affordable Care Act (ACA) marketplace, and you will pay the full cost of your premiums. You also won't have the cost-sharing benefits of an employer-sponsored plan.

If you are looking for a private health insurance plan, you can compare and shop for plans in your state on Healthcare.gov.

Spouse's insurance

If you are over 62 and your spouse is still working, you can use their insurance plan to cover your health insurance. This is a great option if you are retiring early, as it can save you a lot of money.

Your spouse's employer may offer coverage to dependents, in which case you can qualify for a special enrollment period to switch to this coverage within 30 days of losing coverage under your previous plan. Alternatively, your spouse can add you to their coverage during their company's annual open enrollment period.

If you are already 65 and enrolled in Medicare, your spouse won't be covered by your insurance. Medicare doesn't work like employer group coverage, so your spouse must enrol separately and qualify for Medicare themselves. They must be 65 or older to qualify, or they can qualify by disability.

If you are both over 62, you can use Social Security to maximise your retirement benefits. You can claim on your spouse's earnings record, and vice versa. The longer you wait to collect Social Security, the more you will receive.

Health Savings Account (HSA)

A Health Savings Account (HSA) is a savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. HSA funds cannot usually be used to pay premiums. However, they can be used to pay for deductibles, copayments, coinsurance, and some other expenses.

To be eligible for an HSA, you must be enrolled in a high-deductible health plan (HDHP) and not be enrolled in Medicare or claimed as a dependent on someone else's tax return. The funds in your HSA can be used to pay for your deductible or other qualified medical expenses.

• Your contributions are tax-deductible or pre-tax (if made by payroll deduction).
• Interest earned on your account is tax-free.
• Withdrawals for qualified medical expenses are tax-free.
• Unused funds and interest are carried over without limit from year to year.
• The HSA is yours to keep, even when you change plans or retire.

If you are 55 or older, you can make an extra "catch-up" contribution of $1,000 per year, and a spouse who is also 55 or older can do the same if you each have your own HSA account. It is important to note that contributions to an HSA are tax-deductible until you enrol in Medicare, which begins at 65. Therefore, if you are 62, you have a few years to maximise your HSA contributions.

In addition to medical expenses, HSA funds can also be used for other expenses in retirement if you remain healthy or can cover health care expenses with Medicare or private insurance. These expenses could include housing costs, daily living expenses, debt repayment, higher education expenses, and travel.

While an HSA is not specifically designed as a retirement savings vehicle, it can be used to supplement retirement savings. However, it is not a substitute for a 401(k) plan or Individual Retirement Account (IRA).

Medicare

There are four types of Medicare coverage, known as "parts". When you first enrol in Medicare, you will have Original Medicare unless you choose an alternative. The Medicare Advantage Plan (like HMO or PPO) is one alternative option. Some types of plans do not offer drug coverage, in which case you may be able to join a Medicare Prescription Drug Plan.

There are three enrolment periods for Medicare. It is important to sign up as soon as possible to avoid penalties or gaps in coverage. If you are not yet 65 but are receiving Social Security benefits, you will be automatically enrolled in Medicare Parts A and B when you turn 65. If you have not signed up for Social Security before your 65th birthday, you will need to take steps to enrol in Medicare yourself. You can do this during your initial enrolment period, or you may qualify for a special enrolment period later if you or your spouse are still working and have health insurance through that employer.

• A Medicare Prescription Drug Plan (Part D)
• A Medicare Advantage Plan (Part C), like an HMO or PPO, or other Medicare health plan that offers Medicare prescription drug coverage

Medicaid

For those aged 62 and above, you can apply for Medicaid if you are:

• Aged, blind, or disabled and have limited income and resources.
• Terminally ill and require hospice services.
• Aged, blind, or disabled, living in a nursing home, and have limited income and resources.
• Aged, blind, or disabled and need nursing home care but can stay at home with special community care services.
• Eligible for Medicare and have limited income and resources.
• Leaving welfare and require health coverage.
• A family with children under 18 and have limited income and resources.
• Facing very high medical bills, which you cannot pay, and are pregnant, under 18, or over 65, blind, or disabled.

Frequently asked questions