Insurance Issues
Medical Insurance for retirees
In every community retirement exists and has become a part of our daily lives. Currently there is a new trend in retirement generation that is called baby boomer’s retirement. Baby boomers’ retirement is starting to shake up many countries. For example, in Japan the retirement population has reached up to 27% of the total population while the number of their children and young people is continuing to fall. Here in the US, our retirees comprise 18 percent of the total population (according to Ameristat in 2000). At present, many countries are facing problems due to the increasing amount of retirement and one of the areas of main concern is health insurance.
The continued growth of retirement is of course generating new needs in the medical, health and nursing care fields. In spite of this, most health problems of retirees can be solved by obtaining insurance. In practice though, it is not quite easy. A retiree cannot obtain health insurance as a member of a group after he or she retires. He then is forced to buy an individual health insurance policy. The drawback however, is that, premiums for individual health insurance policies are often 50% to 100% higher than group plans with the same benefits. Because of these issues, retirees are compelled to spend more for their health care.
Certainly, there are reasons why retirees have to pay more premiums. One of which is the fact that people age 55 and above are disproportionate users of health care because they have more frequent and more severe health problems than younger and healthier individuals. Another reason is that prescription drug coverage is declining for most of the 55-and-over population, and the gap between health insurance and prescription drug coverage increases with age and retirement. Lastly, only a few employers offer retiree health insurance.
How to arrange medical insurance for retirees is indeed a challenge. It is not just a matter of financial capability in paying premiums but a whole group of factors that need to be considered. Following is just a list of a few things to bear in mind when obtaining health insurance according to Pershealth.com and Retireearlyhomepage.com.
- Cost
Consider the cost of the various plan options available to you compared to the benefits offered. Keep in mind that the cost of any health plan will increase annually.
- Health Plan Type
Decide what type of health plan works best for you and your family. Options include a managed care plan (HMO), preferred provider organization (PPO) plan, Point of Service Plan (POS), and Indemnity plan. Keep in mind, where you live will determine the plan or plans you are eligible for. Managed care plans or preferred provider plans work through specific networks of physicians and hospitals and usually have limited geographic coverage areas.
HMOs usually require that you go to a specific doctor or a specific group of doctors, and the plan normally does not pay if you go outside the group.
PPOs will allow you to go to any doctor of your choice, and will pay up to a certain percentage of the cost, but will pay much more if you stay within the preferred network.
POS or Point of Service plans are a hybrid of PPO and HMO plans. They allow you to go to any doctor within the group, but if you stay within your selected doctor, your fee is usually limited to your co-pay.
Indemnity plans are the plans that pay a certain percentage, such as 80%, and the member of the plan is responsible for the remaining 20% of the entire cost.
- Coverage
Be sure to check how long the plan option you choose will be available to you and/or your family members and what your options would be if or when that coverage terminates. For example, if you are considering insurance through your spouse’s employer plan, does that plan cover children who are in college? When your spouse leaves his or her job, how long will you be eligible for COBRA?
- Separate Cover
If you are over 50, it is a good idea that you separate your family when you apply for health insurance especially if your spouse is younger. Health insurance is sometimes based on the age of the oldest individual. One might be 55 to 59 and another 56-60, so shop around and try different combinations of family members to find best deal. Talk to your broker about this, because different insurance companies work differently in this area.
- State-guaranteed health insurance
Get back up from state-guaranteed health insurance which could be guaranteed to those persons who have previous medical conditions.
- Move to another state
Health insurance premiums and regulations vary greatly from state to state. You may be able to decrease your health insurance premiums by moving. This phenomenon applies whether you're healthy or suffer an expensive, complicated medical problem. It's the most visible symptom of the confusing state of the health insurance market in the United States.
For the most current state-by-state health insurance information see the Georgetown University Institute for Health Care Research and Policy at http://www.healthinsuranceinfo.net/ There is also continuously updated information on the Health Insurance forum on Insure.com, see http://www.insure.com
Several states have health risk pools to accommodate residents with pre-existing conditions that are shut out of the standard individual health insurance market. Premiums can be two or three times the cost of a standard individual health insurance policy with equivalent benefits.
For example, here's a link to the Texas Health Risk Pool http://www.txhealthpool.com A non-smoking 40-year-old male would pay $327/month for a $1,000 deductible policy with a maximum annual out-of-pocket cost of $4,000 per year if he didn't stray beyond the PPO network. The premiums under this plan rise to $480/month for a 50-year-old and a draining $819/month for a 60-year-old. (That's probably more than most 60-year-old Texan's monthly mortgage payment.)
What’s most important in choosing medical insurance for retirees is to research and shop around first. Choose the plan that suits you best and answers all your needs and requirements. Talk to an insurance broker. Insurance brokers can give you free advice regarding all of the different insurance plans available, and they only get paid when you actually purchase your insurance. For more information on insurance brokers, go to http://www.nahu.org
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