If you’ve been covered by a generous employer group health plan,
you may be in for a rude awakening when you retire. Here are some
tricks for keeping health care costs under control after you retire.
Although the government may subsidize some of your
health care costs under the Medicare program, you will
still be responsible for certain out-of-pocket costs. You
will want to do everything in your power to prepare for
these costs, as well as avoid unnecessary costs like late
enrollment penalties, overpriced private plans, and
superfluous trips to the doctor.
Avoiding late enrollment penalties.
Did you know that there’s a penalty for not enrolling
in Medicare on time? That’s because the only way
the system can work is if everyone — the sick and the
healthy, the young and the old — participate in the
program. If you fail to enroll in Medicare when you
are supposed to, you will be charged a penalty equal
to 10% of the Part B premium for every 12 months
you delayed signing up for Medicare. The penalty is
permanent and must be paid for the rest of your life.
To avoid it, find out when you need to enroll in Medicare
and be sure to sign up during your enrollment period.
If you are retired and covered by a retiree plan, or if you
are working and covered by a plan that covers fewer
than 20 employees, you must enroll in Medicare Part B
no later than the third month after your 65th birthday.
If you (or your spouse) are still working and covered by
a group plan that covers 20 or more employees, you
must enroll in Medicare no later than the 7th month
after your group coverage ends.
Practically speaking, you’ll want to avoid gaps in
coverage by enrolling in Medicare before your employer
coverage ends. But to avoid penalties, make sure you
sign up no later than the end of your enrollment period.
Shop carefully for private insurance.
Medicare does not cover everything. In order to avoid
coverage gaps for prescription drugs and the portion
of medical services that Medicare doesn’t pay for, you
will need to have private insurance. Whether you buy
a comprehensive Medigap policy plus a standalone
prescription drug plan, or enroll in a Medicare
Advantage plan, you will need to shop carefully to get
the best plan for your needs.
Comparing monthly premiums is just a starting point.
You will also need to pay attention to deductibles,
How to Keep Health Care Costs Under Control in Retirement
J David D. Burt, LUTCF
David Burt Financial Solutions
1408 5th Ave SE
Decatur, AL 35601
License #: 4621852Reprint Licensee: J David D. Burt