The Best Health Care Plan For Retirement
With the continuous rise in health care and with 43 million Americans -- mostly children -- without any coverage at all, considering a good health care plan for retirement is essential. It is a fact of life that we wear out as we age, no matter how well we take care of ourselves. Protecting yourself when you reach the "Golden Years" is essential. This article discusses health care plans for seniors preparing to retire.
Begin Before Retirement
It is always in your best interest to plan ahead when considering insurance. If you work for a company with 20 or more employees, you may qualify for retiree health insurance from your employer. The Big Three usually have these plans. They are your best bet, but with the automakers downsizing and making concessions, it is risky business. The other alternative from your employer is the COBRA plan, which is required to be offered to you at end of employment. It is very expensive.
What Are Other Alternatives?
Because COBRA is so expensive, look to other programs. However, if you have existing conditions you may have no choice but to maintain COBRA. You can't be turned down for existing conditions with COBRA. But if you are healthy enough to be working, your best bet after retirement is a personal health insurance plan. Depending on the state in which you live, these can be quite affordable. According to American Health Insurance Plans, the average premium is $4,185 per year for people age 60 to 64 buying single coverage and $7,248 for family coverage. This is about $348 dollars per month for single person coverage.
The Health Savings Account
You might want to look into a health savings account. These policies are available to anyone under age 65 who buys a qualified health insurance policy with a deductible of at least $1,050. The health savings account allows you to set up an account using pre-tax dollars up to the deductible of your current policy. You can set up a family plan that allows $5,450, plus an extra $700 if you're 55 or older. This money is tax free for medical expenses, and can be rolled over tax deferred.
One good strategy is to have a high deductible health plan and then supplement it with a health savings account. When you enroll in a HDHP, the plan will determine if you are eligible for a HSA. Remember, this strategy only works if you are not on Medicare.
Long Term Care Insurance
A big worry for many retired people is long term care if they become ill. One way to ease this burden is through long Term Care Insurance (LTCI). LTCI is really not something you can plan around; the earlier you begin considering this, the better off you are. Such things as an auto accident that leaves you in a position of needing long term care can happen at any time.
Long term care goes beyond normal medical needs and nursing care. The qualifiers are:
- Chronic physical illness
- Mental illness
- Cognitive impairment
An insurance plan considers Activities of Daily Living (ADL) to determine if long term care is needed. These parameters are defined by the medical community. If you are unable to perform 2 of the 6 requirements of daily living, you qualify. These requirements are:
Although these things seem like commonplace activities, they may mean the difference between living out your retirement years at home or needing nursing care. Long term care means that you can afford a skilled person to come into the home and help you with these needs.
The LTCI plan makes good sense. The plan provides help for you when in a debilitative state and yet protects your assets. It is basically a contract between you and the insurance company to protect your assets when becoming disabled. It pays your expenses if you need another person to help you with your daily activities. The plan is NOT designed to provide coverage for surgery, medications or hospital coverage. It is not medical coverage, nor is it a supplement to Medicare.
Knowing what is best for you and your family upon retirement makes good sense. No one wants to be a burden to their children, nor do they want to spend their retirement years living in poverty or in a nursing home. Know what you need for medical and health coverage. It will go a long way toward making retirement the fun time it should be.