New York, New York (PRWEB) August 2, 2005
Traditionally, early retirees have counted on their former employers for their health insurance, but fewer and fewer firms are offering it these days. According to a 2004 study by benefits consulting firm Hewitt Associates and the nonprofit Kaiser Family Foundation, 80 percent of firms with at least 1,000 workers offered health coverage to retirees in 1991. However, by 2003, that number had fallen to 57 percent. Among smaller companiesÂthose with 200 or more employeesÂthe number is just 38 percent.
This means that youÂll probably be on your own when it comes to health insurance. As these two stories from the Armchair Millionaire community attest, that can be a difficult road:
ÂWhen we retired early and moved away from our HMO coverage area, we were both denied health insurance from major companies for trivial reasons. We now have insurance through a state program which covers very little, and it costs us over $12,000 a year with $2,500 deductible each. We are in a sense self insured while paying outrageous premiums! --Colleen
ÂI retired early and a year later my employer started cutting their contribution toward retirees health insurance. My premium went up 20 percent with more increases to come. My wife didn't want to retire so now I'm a dependent on her policy until she retires. One of my retired co- workers got a private plan and dropped our employer's plan. I thought I was set. But with premiums running at 10 percent of gross income I was sadly wrong! --is24
If you're among those who cannot access health insurance through your former employer, my guide explains your options for obtaining it elsewhere.
The Armchair MillionaireÂs Guide to Health Insurance for Early Retirees
Join your spouse's plan. If your spouse (or domestic partner) is still working and his or her employer will extend coverage to you, this is more than likely your best option.
Extend your coverage under COBRA. Under federal law (commonly known by its acronym, COBRA), your former employer is required to keep you on its group health insurance plan for 18 months after you leave work. You will have to pay the full cost of the premiums plus a 2 percent administrative fee, however. Also, companies with fewer than 20 employees are exempt, so if you worked for a small business, you're out of luck.
Get coverage through an organization or association. Many professional groups and alumni associations offer group health insurance coverage to its members. Find out if these include any you belong to (or could join).
Go back to work. Since you're supposed to be in retirement, this is not likely to be an especially attractive option, but it may be one worth pursuing. You can look for employers who offer health insurance to part-time employees. Alternately, by starting your own business, you might qualify to buy group insurance as a "group of one."
Buy an individual policy. If all else fails, you may need to purchase an individual policy. It is usually less comprehensive and more expensive than being part of a group plan, but still infinitely better than being uninsured. But be aware that, unlike when you are covered by a group policy from an employer, individuals applying for their own insurance must provide a detailed medical history. If you have a pre-existing medical condition, your policy may specifically refuse to cover that problem, or you may be declined coverage altogether. If that's the case, find out if you live in one of the 29 states that offer high-risk pools, or coverage for residents who can't otherwise get insurance. You can find a list at http://www.cobrahealth.com.
THE BOTTOM LINE: If you retire before age 65, it's very likely that you'll need to find your own way when it comes to health insurance. Know your options so you can be well prepared.
THE ARMCHAIR MILLIONAIRE WEEKLY SURVEY: Do you use the Internet to manage your money? Log on to http://www.armchairmillionaire.com and let us know.
Lewis Schiff founded the Armchair Millionaire Web site in 1997. His first book, The Armchair Millionaire, was published in 2001. Schiff's newest report, "How to Know When You Are Rich," is now available at http://www.armchairmillionaire.com.
CONTACT INFORMATION:
Lewis Schiff
Armchair Millionaire
877-833-2823
http://www.armchairmillionaire.com
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