If you are retiring or are laid off, health care costs are a major consideration as you may lose your group health insurance; fortunately, you have several options for health coverage. We can assist you with reviewing the cost and benefits of each of these potential options and help you with Medicare, ACA and short-term plan enrollment.
If you are retiring at 65, you should sign up for Medicare during your seven-month initial enrollment period (IEP), which expires three months after the month you turn 65. Or, if you delayed Medicare enrollment beyond age 65 because you had employer health coverage either from your job or your spouse’s job, you have a special enrollment period to enroll in Part A and/or Part B which lasts until eight months after the employment ends.
If you are taking Social Security, you will automatically receive your Medicare card three months before you turn 65. If you are deferring Social Security, you can enroll in Medicare online or schedule an appointment with Social Security.
If you previously deferred but now need to enroll in Part B, your HR department must complete a form indicating when group coverage ended, and you will complete a form specifying your desired Part B effective date. Both forms then need to be mailed, faxed or taken to a Social Security office. The instructions are here under the section “Already Enrolled in Medicare”; feel free to contact us for assistance.
- COBRA (Consolidated Omnibus Budget Reconciliation Act)
Employers with 20 or more full-time-equivalent employees are usually mandated to offer COBRA coverage after your employment ends or if you lose coverage as a dependent of the covered employee. COBRA can be costly as you pay 100% of costs plus an administration fee. You must be given at least 60 days in which to choose to elect continuation coverage. Even if you waive coverage, you can change your mind within the 60-day election period. From the date of the qualifying event, COBRA coverage extends for a limited period of 18 or 36 months, depending upon the applicable scenarios. Because COBRA does not count as insurance from active employment, you will not be protected from delayed coverage and late penalties if you wait to enroll in Medicare later than you should.
- ACA (Affordable Care Act)
If you lost your health insurance due to job loss, you qualify for a “special enrollment” period on the federal exchanges. This gives you 60 days from the loss of your group insurance to sign up. ACA plans are often less expensive than COBRA and are guaranteed issue, meaning a policy is offered to an eligible applicant regardless of health status. If you miss the 60-day special enrollment window, you can opt for a short-term health insurance plan.
- SHORT-TERM HEALTH INSURANCE
Short-term health insurance can be a solution for those looking for a less expensive alternative to COBRA or ACA. This is also a good alternative if you just need to bridge temporary gaps in coverage. For example, if you are 64, plan to enroll in Medicare at 65, and need less than 1 year of coverage, or if you are younger and need a short-term plan for up to a year or longer to cover you until you regain group insurance. Short-term medical plans can go into effect as soon as the next day after enrollment and can be canceled anytime. However, these plans do not cover pre-existing conditions and are not a good idea if you are planning to start a family.
A potential COBRA beneficiary also can explore whether they may qualify for a public assistance program such as Medicaid or other state or local programs. However, such plans may be limited to low-income groups and may not offer the best care and services compared to other plans.
Interested in learning more about your health care or Medicare benefits? Reach out to us.
Suzanne Werts is the Principal Broker at Heartland Insurance Group, specializing in Medicare Insurance.
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