How Do I Get Health Insurance When I Retire?
When you retire, you have multiple options for health insurance:
Medicare: When you turn 65, you are eligible for Medicare, an insurance program operated by the federal government.
COBRA: When you leave your job, you have the option of extending your employer-offered health benefits through the Consolidated Omnibus Budget Reconciliation Act (COBRA). With COBRA, you can continue your coverage for 18 to 36 months.
Health Insurance Marketplace: You can purchase private insurance under the Affordable Care Act on healthcare.gov.
Short-term coverage: Private insurance companies often sell short-term coverage, which is a form of temporary insurance you can use to bridge the gap until other coverage goes into effect.
Do I Need Health Insurance If I Have Medicare?
While Medicare is an excellent option for retirees, you won’t qualify for it until you turn 65. If you retire before that date, you’re responsible for getting your own coverage.
However, even eligible Medicare beneficiaries may need additional insurance.
Medicare covers a large portion of your health expenses, but it doesn’t pay for all of your necessary medical services. Original Medicare—which is made up of Medicare Part A (hospital insurance) and Medicare Part B (medical insurance)—doesn’t cover:
- Dental care
- Hearing aids
- Long-term care
- Prescription drugs
- Routine foot care
If you want insurance that covers the above services, you’ll need additional coverage, such as a Medicare Advantage Plan.
What Does Health Insurance for Retirees Cost?
When it comes to health insurance as a retiree, your costs depend on what insurance options you choose and your age.
Original Medicare: There are two parts to Original Medicare:
- Part A: You won’t pay a premium for Medicare Part A as long as you or your spouse paid Medicare taxes for a certain amount of time. If you aren’t eligible for premium-free Part A, you can purchase Part A coverage. It costs $252 to $458 per month as of 2020.
- Part B: All beneficiaries have to pay a premium for Part B coverage. The standard Part B monthly premium is $144.60 per month, but it can increase based on your income.
Medicare Advantage Plans: If you opt for a Medicare Advantage Plan, you may have to pay a monthly premium in addition to your Part B premium. The average monthly premium for a Medicare Advantage Plan is $25.
Health Insurance Marketplace Plans: If you purchase insurance through healthcare.gov, your monthly premium cost is dependent on what tier you choose, the provider network, your selected deductible, and whether you are eligible for a subsidy. The average marketplace benchmark premium is $478 per month.
COBRA: With COBRA, you can continue your employer-offered insurance policy, but you’re responsible for paying the entire premium yourself. The average premium for single coverage is $599 per month, or $7,188 per year.
Short-term coverage: Short-term coverage tends to be inexpensive, costing just $116 per month, on average.
How We Chose the Best Health Insurance for Retirees
To identify the best health insurance companies for retirees beyond Medicare, we looked at 18 providers of Medicare Advantage Plans, Medigap policies, private insurance, and short-term coverage. We evaluated each company based on their coverage options, costs, benefits, and financial stability for seniors to select the top five companies.