How to Protect Your Retirement by Making Health Insurance Part of Your Retirement Planning

Health insurance is as important to your retirement security as home and auto insurance. That’s because costs of major health issues, like the cost of a catastrophic accident or losing your homeHealthLifeDental Insurance Retirement Planning to a fire, if not insured, could wipe you our financially.

But unlike home and autos – which can be paid off and considered assets, your health is never paid in full – and estimates forecast that the average 65-year-old couple can expect health care costs of more than $275,000 in their retirement years. Unless your retirement package includes ongoing coverage and guaranteed eligibility for supplemental insurance, many people risk spending the bulk of their retirement savings on the aftermath of a major medical event.

With some careful planning, it’s possible to avoid that dreary future and focus on enjoying retirement rather than the effect of potential claims on a fragile nest egg.

Why Health Insurance Matters In Retirement

Wondering why health insurance should be a part of your retirement planning? Let me explain:

The future of healthcare is uncertain. With the proposed changes to mandated health insurance coverage and programs pulling back from the Affordable Care Act, Americans about to retire find themselves in a gray area for health insurance. Many don’t have coverage and are worried about choosing a provider amid such uncertainty.

Few companies provide health insurance in retirement packages. According to the Kaiser Family Foundation, employer-provided coverage won’t be as much help to retirees as it used to be. Its research indicates that only 25% of large employers even offer retiree health coverage, compared with the 40% of employers who offered it in 1999.

Additionally, the current administration’s intent to amend the ACA is clear, but the details of its plan to change federal insurance laws are not. For anyone nearing retirement, the potential impacts to insurance coverage and costs should be of special concern. For instance, the reintroduction of high-risk pools for pre-existing conditions could lead to declining coverage and higher premiums for many.

Potential tax consequences exist for not having health insurance. While the Republican Party’s most recent attempt to overhaul the American healthcare system failed, the issue still tops the party’s to-do list for 2018. One of the proposed changes the GOP has loudly touted in past health bills is the elimination of the penalty for not having insurance.

While the fine no longer exists, two recent versions of the bill suggested people without insurance for more than 63 days would have to pay a 30% premium penalty or forgo coverage for six months.

Here’s the point: no matter how well-thought-out a retirement plan is, failure to account for insurance needs puts a financially secure retirement at risk.

Preparing For a Healthy Retirement

The clear path to a healthy and full retirement requires considering what you might need in the years to come – and approaching health care insurance knowing that our Healthcare System is, to say the least, full of uncertainty. Use these three strategies to create a thorough plan:

  1. Do your research.

Learn the pros and cons of today’s insurance options. You might qualify for Medicare Part A, but Medicare Part B could cost you an out-of-pocket premium. Keep in mind that out-of-pocket costs for premiums increase without employer supplementation. What was once a $250-per-month premium can quickly skyrocket into a $1,000-plus payment for the same coverage.

When you get serious about planning for retirement, we can work with you to help you predict what your out-of-pocket premiums might be. Based on that we can help you allocate funds between savings and a Living Benefits Health Insurance Policy to insure that you can comfortably meet those predictions.

  1. Know your risks — and make sure they’re covered.

Know your specific health risks, and know which currently available insurance options cover them. This will serve as an excellent guide to planning for healthcare needs in retirement. If you’re in excellent health and have no risk factors or history of life-threatening illnesses, it might seem like a good idea to focus solely on coverage for major medical events. That strategy could cut down expenses, but it also leaves a significant gap in coverage.  As professionals with a long-standing track record for successfully protecting our clients, we can help you with this.

The goal is to cover as many bases as possible. Even something as simple as appendicitis could cost more than $55,000 — Without the right insurance policy, the experience could be catastrophic, both financially and emotionally.

  1. Prepare for the worst.

If you buy life insurance for the worst-case scenario, then why not plan for the aftermath of such a scenario? Medical bills can stack up after a major medical event, and in the worst-case scenarios, those bills are often left to family members. Some people might view the discussion about insurance as taboo. But, practically speaking, it’s worse to avoid the discussion and fail to plan.

Making sure the whole family is prepared for the worst can be difficult, but it’s absolutely necessary, and part of how we help our clients protect their loved ones.

When I speak with professionals who haven’t added their health care needs to their retirement planning, they’re often as surprised as I am that they haven’t considered it. The point of retirement planning is to enjoy your golden years, and you can do that more effectively if you aren’t worrying about how to cover medical expenses.

Call us now at 1-800-257-1723 or click here for an appointment.


Based on Daniel Wesley’s recent article in Forbes
Mark Deschenes

Author Mark Deschenes

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