During retirement, it’s important to have access to affordable health insurance that can help pay for your care. You can buy individual health coverage on the Health Insurance Marketplace or you can work with private insurers to find a plan that works for your budget and healthcare needs. Private plans can be more flexible and affordable than options available on the Health Insurance Marketplace. But how can you tell whether you’re getting the best deal on your retirement health insurance? Here are some tips on evaluating your retirement healthcare providers to make sure you’re getting the most out of your benefits.
You may have the option to continue to receive retiree health benefits from your former employer if you worked for a company with an Employee Retirement Income Security Act (ERISA) plan. This is often the case for employees of large firms. However, the availability of retiree health coverage from your former employer depends on a number of factors, including your firm’s financial stability, how much its active workers earn and the quality of its medigap and supplemental insurance offerings.
As the cost of health care continues to increase, many companies Click to explore have taken steps to limit their liability for retiree health costs. This can include putting hard caps on their liabilities, switching to a defined contribution approach, and increasing premiums and costs-sharing requirements for participants. Some employers have even stopped offering retiree health benefits altogether. This has left some retirees on fixed incomes having to pay directly for medical services and turn to publicly-sponsored Medicare Advantage plans or go without coverage.
To offset the rising cost of health care, retirees can also purchase medigap insurance to supplement their Medicare Part B coverage. But these policies have their own cost implications, as some of the most expensive medigap policies are those purchased through the first six months after you enroll in Medicare Part B and become eligible for Part D prescription drug coverage. This type of “issue-age” policy typically costs more at later ages and can be unaffordable for retirees on fixed incomes.
Another consideration when evaluating your retiree health insurance options is that some employers have pooled their retiree groups together for purposes of purchasing group insurance from an outside insurer. To do this, they assign age-specific risk factors to their groups. The actuary performing an actuarial valuation for the retiree group benefit program should consider the impact of this pooling when analyzing its expected costs and premiums. This is particularly important if the pooled groups have different demographic characteristics or are in different geographic areas. The actuary should also be aware of the possibility that projection assumptions may have an effect on the pooled groups’ expected claims costs and premiums. When this is the case, the actuary should consider whether it is appropriate to adjust those assumptions for the unique risk of the retiree group being valued. This should be disclosed to the group’s members. If the actuary concludes that it is appropriate, it should use a projection assumption that is weighted accordingly.