Health insurance considerations weigh heavily on the minds of people wanting to retire before Medicare coverage kicks in at age 65. Many people put off retirement simply because the cost of an individual health insurance policy is too great on a limited income.

What options for health insurance do you have if you choose to retire before age 65? Although they are not required to, you may be able to get COBRA-like coverage from your employer.

As an added retirement benefit, your employer may allow you to pick up the premium on your policy; although paying 100% of your premium may initially appear to be an expensive option, purchasing an individual policy apart  from a group may be even more costly and not provide you with the level of coverage you previously had.

Some companies are offering basic high-deductible insurance reasonably in the hopes that they will be able to enroll you in Medicare Part C (supplemental insurance) when you retire.

Another option is to budget and save money to cover your anticipated medical costs for the time period between retirement and age 65. If you are in very good health, this may be a viable alternative for you.

Pre-planning for retirement is an important issue; the earlier you start planning, the better. Realizing the Medicare does not pay all of your medical expenses, you should budget money for medical expenses even after retirement.

Tags: health insurance

If you are considering changing your health insurance policy, you should be aware of the alternative of a Health Savings Account (HCA).

Health Savings Accounts started to become available (and legal) in 2004, allowing people with high-deductible insurance policies to set aside tax-free money to fund medical expenses up to the maximum deductible amount.

If you don’t have to use the funds, it rolls over every year. Once you reach age 65, you no longer are required to use it for medical expenses, although you certainly can; you can withdraw funds under the same conditions as a regular IRA.

Although you will be penalized if you use the funds for non-medical expenses prior to age 65, you can use the money for vision care, alternative medicine or treatment and dental care.

For 2008, an individual may fund up to $2,900 tax free. The maximum deductible would be $1100 and the maximum out-of-pocket cost would be $5,600.

For a family, the maximum tax-free contribution is $5,800 with the maximum deductible of $2,200 and the maximum out-of-pocket cost would be $11,200.

Health Savings Accounts are certainly a viable way to shelter income while providing catastrophic insurance coverage in light of the high cost of low-deductible health insurance plans.

For healthy people, it deserves some research. Consult with your insurance agent for all of the details involving this approach to managing your insurance needs.

Tags: health saving accounts