What Are My Options for Coverage in Retirement?

by: Patricia Barry, from: AARP Bulletin, January 30, 2009

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Q. I’m 58 and plan to retire at 60. As I worked outside the United States until 2004, I will have only 28 work credits toward Medicare at age 60. What are my options for medical coverage in retirement?

A. You may want to think about working a little longer. Unless you’ll receive health benefits from an employer or union in retirement (and your question suggests that you won’t), you need to consider what coverage you can get before age 65 as well as after. Here are the options:

Before age 65:

Spousal benefits. If your spouse is working and has employer health insurance, you may be able to transfer to his or her plan for your coverage. Your spouse should contact the benefits administrator and add you to his/her coverage no later than 30 days after your own insurance ends. (Otherwise, you’d have to wait until the employer’s open enrollment period near the end of the year.)

Veterans' benefits. If you served in the armed forces, you may qualify for the health care program run by the Department of Veterans Affairs. This program does not cover dependents. For more information, go to the VA’s health benefits website or call the VA Health Benefits Service Center toll-free at 1-877-222-8387.

COBRA temporary insurance. If you receive health insurance from your current employer, you may qualify to have it extended after retirement. The COBRA law allows people who have left or lost a job to continue the same group insurance coverage for themselves and their families for up to 18 months by paying the full premiums. Go to the U.S. Department of Labor’s website for more information.

Individual health insurance. You can purchase nongroup insurance for yourself (and any dependents). This type of insurance is often costly, and you may be denied coverage or asked to pay a higher premium if you have preexisting health conditions. To find contact information for insurers in your area go to this government website. However, if you’ve had group or COBRA insurance for at least 18 months (and with no break in coverage longer than 63 days), you may have the right to buy individual insurance that doesn’t exclude or limit coverage for preexisting conditions. For general information, about this program, available under a law called HIPAA, go to the U.S. Department of Labor's guidance for consumers. For specific details on your rights, contact your state department of insurance.

Medicaid. If your income is limited, you may qualify for medical assistance under the federal-state Medicaid program. (This program has a different name in some states, such as MediCal in California, MassHealth in Massachusetts, and TennCare in Tennessee .) To qualify, you must meet income and saving limits required by your state. For a quick way to see if you’re eligible for this and other government programs, go to the Benefits Checkup website. For help in applying for Medicaid, contact a counselor at your state health insurance assistance program (SHIP). To find the phone number of your SHIP, click here or call 1-800-677-1116.