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A Guide to Health Insurance for Retirees


After all your hard work, you deserve to enjoy your retirement without worrying about whether or not your healthcare expenses will be taken care of. Despite rising healthcare costs, there are several ways you can ensure your coverage is strong enough for the times in life when you’ll need it most. As you navigate this retirement planning journey, it can also be helpful to enlist the help of a financial advisor.


Most of the options listed above can serve as health insurance for early retirees as well. So you can take advantage of these regardless of what age you retire. Medicare, however, will be available to you when you reach a certain age and under certain conditions.

Medicare is a federal program designed to supplement healthcare costs for the elderly in America. To be eligible you must be a U.S. citizen or have been a permanent legal resident for at least five years. You or your spouse would also have to have paid your Social Security taxes for at least 10 years. Uncle Sam has been taking these from your paycheck, so you’re most likely in the clear.

Some people who qualify get enrolled automatically. But if you have to apply for Medicare, make sure you do it during open-enrollment period. This spans from Jan. 1 to March 31 each year.

Medicare isn’t one stand-alone program, however. It exists as a big alphabet soup of different pieces. Each carries its own set of rules and, yes, costs. Here’s a breakdown of the major areas of Medicare:

  • Medicare Part A covers you when you’re hospitalized. Most people don’t pay premiums for this service. However, it carries a deductible. For 2023, it stands at $1,600.
  • Medicare Part B covers services like doctor visits, medical equipment and certain tests. This piece carries a premium of $164.90 a month in 2023. However, you won’t owe a premium if you’re already receiving Social Security, Railroad Retirement or Civil Service benefits.
  • On the other hand, there is Medicare Part C or Medicare Advantage. This basically functions as a separate health plan offered through private insurers. That said, each plan has its own costs and benefits. So it’s important to shop around for one that works best for your retirement budget.
  • Medicare Part D covers prescription drugs. Premiums for this plan depend largely on your income.

Taking Advantage of a Health Savings Account (HSA)

As you can see, staying healthy in retirement can come at a heavy price. But you can start investing in your health today. If you’re enrolled in an eligible high-deductible health plan (HDHP), you can pair it with a health savings account (HSA).

These are tax-advantaged savings accounts designed to help you pay for future medical expenses. They work similarly to an individual retirement account (IRA). You can make pre-tax contributions toward an interest-bearing account or a portfolio built with stocks, bonds and mutual funds. Your earnings grow tax free. Plus, you can make tax-free withdrawals any time as long as you use the money to cover qualified health expenses.

Your employer may offer an HSA already. Otherwise, you can open one at most banks and financial institutions. And of course, you’re generally eligible for Medicare once you reach age 65.

Health Insurance Marketplace

health insurance for retirees

When you retire, you can sign up for a plan through the federal Health Insurance Marketplace. And there’s good news: A marketplace insurance plan still can’t reject you or charge you more due to pre-existing conditions under the Trump Administration.

However, the “affordable” part of the Affordable Care Act (ACA) is still vague at best. For some plans, premiums can climb to $1,000 a month. So make sure you shop around for the best priced plans that can cover the healthcare services you need the most. But if you make below a certain income, you may be eligible for lower costs via federal subsidies.

Still, you can find plans that are more beneficial to you outside the government exchange.

Employer-Sponsored Health Insurance for Retirees

Your current employer may sponsor specific healthcare benefits designed for its retirees. Depending on how long you’ve worked for your company, you may be able to tap into these even if you retire today. For instance, some companies provide group health insurance plans for early retirees. In such cases, your company may supplement your medical expenses by covering part of the premium for these plans even after you’ve left the office.

These benefits are more common among large employers with at least 200 employees. According to a study by the Kaiser Foundation, 13% of large employers offered retiree health coverage as of 2022. And while the rate climbed to 40% in 1999, you should still reach out to your benefits department. Learn all about their health insurance plans, as well as how they change when employees retire.

Even if your employer doesn’t provide its employees with specific retiree benefits, a special provision in a government program allows you to keep your employer-sponsored health insurance plan to a certain extent after you leave your job.

Keeping Your Employer’s Health Insurance Plan Through COBRA

If you’re currently enrolled in an employer-sponsored health insurance plan you like, you may be able to keep it temporarily. This is made possible through the Consolidated Omnibus Budget Reconciliation Act (COBRA). The program typically applies to companies with at least 20 employees, as well as some state and city government entities.

It allows you and your family to keep your employer-sponsored health insurance plan for up to 18 months after you retire or lose your job. However, you’d be responsible for the entire premium. The insurance company can also slap up to 2% on the price tag for administrative costs.

But if the plan is still worth the price, you can trigger COBRA by contacting the health plan within 30 days after leaving your company. The insurance carrier will then contact you and provide you with instructions on how to elect COBRA. Because these plans change frequently, pay close attention to the details. You’d want to make sure your preferred specialists stay in the insurer’s network, for example.

But don’t fret if you come down with sticker shock after you leave your job. You have more options.

Private Health Insurance

You can buy a health insurance plan directly from an insurance company outside the federal marketplace. A health insurance agent can also help. You should seek a health insurance agency in your area that holds contracts with the major local providers.

An agent can help you find the best health plans based on your individual needs and financial situation. You can also turn to the State Health Insurance Assistance Program.

Enroll in Spouse’s Plan

health insurance for retirees

If you retire before your spouse, you may be able to list yourself as a dependent on his or her employer-sponsored health plan. Some companies even offer retiree health benefits to the spouses of their employees. If so, figure out eligibility requirements as well as premium prices.

In addition, your kids may be eligible to enroll in the state and federal Children’s Health Insurance Program.

Bottom Line

With the rising costs of healthcare expenses dominating the news cycle these days, it can sound scary to cover this without working your entire life. But there are several ways you can reduce your medical expenses. You may be able to walk away with your current employer plan or find one that meets your needs and budget either on the federal exchange or in the private industry. It can also help to start saving through an HSA. Whatever route you take, make sure you dig into the details and costs of each.

Retirement Healthcare Tips

  • The cost of healthcare can vary widely by location. So you may want to retire in a place where it dips the lowest. To help, we’ve developed a study on the best states for healthcare access.
  • Retirement planning and saving for healthcare expenses are two of the most important aspects of your financial life. But you don’t have to figure it all out on your own. If you’d like some professional guidance, a financial advisor can help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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