Healthcare Educators


Health Insurance for Retirees

by | Jun 17, 2019

Health care is one of the biggest expenses retirees face. According to the most recent estimates from Fidelity, the average couple will spend about $285,000 on health care during retirement.

Given the high medical costs, it’s clear that selecting the right health insurance is vital. The plan you choose will determine the premiums, deductibles and copays you owe, as well as the coverage available. While retirees generally get their insurance through Medicare, coverage options can still be complicated. In addition to getting to choose between Original Medicare and Medicare Advantage, some retirees also have access to health plans through a current or former employer.

Medicare and Retirement

Regardless of when you retire, you qualify for Medicare when you turn 65.

If you retire before turning 65, you will need to find another source of health insurance until you become eligible for Medicare. This could be COBRA continuation health care coverage, a retiree plan offered by your former employer, coverage through your spouse’s employer or a plan purchased on the Marketplace.

If you retire after turning 65, you may be able to delay enrollment in Medicare as long as you are enrolled in a group health plan and your employer has 20 or more employees. However, it’s important to verify that you are eligible for delayed enrollment. Otherwise, you could face expensive lifetime late penalties when you decide to enroll in Medicare.

Enrollment in a COBRA or retiree plan does not qualify you for penalty-free late enrollment in Medicare. In either of these situations, you will be expected to enroll in Medicare when you turn 65 in order to avoid late fees.

Having Two Plans

Needing to enroll in Medicare does not necessarily mean you can’t keep your other coverage. In some cases, it’s possible to have coverage through two plans. Although this can mean you pay more in premiums – because you’re paying premiums for two plans – it may provide you with additional coverage and lower your other out-of-pocket costs.

One fairly common scenario occurs when you have coverage through a retiree plan when you turn 65. You need to enroll in Medicare to avoid late fees, but perhaps you like your retiree health plan and don’t want to lose it. In this situation, you may be able to enroll in both plans.

If you’re facing this situation, you likely have a lot of questions:

  • If you have Medicare and a group health plan retiree coverage, which plan pays first?
  • Does being eligible for Medicare impact your group health plan retiree coverage?
  • What happens if your former employer goes out of business?
  • How can retirees find out how their plan interacts with Medicare?
  • What else should retirees know about retiree coverage and Medicare?

Watch this video for the answers.