Kevin McCormally: I am Kevin McCormally of Kiplinger's. I am here with Kim Lankford, the Insurance Editor of Kiplinger's Personal Finance Magazine to talk about health insurance for early retirees. Kim, we know that most people retire before age 65 which is when medicare kicks in, what do they do for health insurance?
Kim Lankford: Well, that is one of the toughest things for people when they retire early. They worry what they are going to do after their employer's coverage ends, but the good news is there is a Federal Law called COBRA that requires employers to continue to provide coverage for people for up to 18 months after they retire.
Kevin McCormally: Is that a good deal?
Kim Lankford: It can be good deal, especially if you have any health conditions. In that case the employer must continue to cover you regardless of your health and cannot charge you a higher rate because of your health.
Kevin McCormally: What if you are healthy, can you get a better deal of it elsewhere?
Kim Lankford: Well, that's the thing, because most employers generally pay about 75% of the health insurance premiums while you working. After you stop and go in COBRA, you have to pay the entire bill yourself, which can be huge jump in premiums. You maybe able to find a better deal on your own, if you are healthy.
Kevin McCormally: How do you shop for health insurance?
Kim Lankford: Well, a good way is to get quotes at a website like ehealthinsurance.com or you can work with a broker that deals with many insurance companies.
Kevin McCormally: How do you find a broker?
Kim Lankford: A site like nahu.org, which is the association of health insurance agents, can help you find one in your area.
Kevin McCormally: How can you call down the cost of health insurance when you do buy it on your own?
Kim Lankford: One of the best ways to do that is to increase the deductible, and if you have any deductible of at least $1100 for individual policy or $2200 for family coverage, you can also qualify for health savings accounts.
Kevin McCormally: What's that?
Kim Lankford: Well, that let's you set aside tax deductible money in an account that you can use in the future to pay your for your deductible, pay those out of pocket cost, anything tax free for those medical expenses.
Kevin McCormally: Well, is an HSA like a flexible spending account to people who haven't worked with that use it or lose it rule?
Kim Lankford: No, and that's one of the best things about an HSA. You can use that money at any time and the money you don't use that year, you keep in the account. It can continue to grow until you need it in the future, whether it's before or after you qualify for medicare.
Kevin McCormally: Thank you very much Kim.
Transcription by:
Scribe4you Transcription Services