Del. Regulator Offers Advice on Healthcare Options for Early Retirees

By | January 24, 2012

Delaware Insurance Commissioner Karen Weldin Stewart expressed concern for soon-to-retire Baby Boomers (those born between 1946 and 1964), many of whom will face the uncertain prospect of finding alternative health insurance coverage until they reach the age of 65 when they are eligible for Medicare.

“While for some in this age group, a lifetime of working means a good pension and benefits after concluding their careers. However because more and more companies are converting retirement benefits, too many in the ‘boomer generation’ are left in the precarious position of finding alternative health insurance coverage,” the commissioner said.

For those considering early retirement or need to consider retirement health insurance options, Delaware Department of Insurance offers these possible options for where to look and what to consider:

• Spouse’s Policy – If the spouse is still employed and has access to benefits, the retiree may be able to be added to the policy. While the spouse may have to pay more for the coverage, this is likely the most affordable option.

• COBRA – The Consolidated Omnibus Budget Reconciliation Act (COBRA) lets former employees and their dependents continue their coverage for up to 18 months. While one’s employer cannot refuse coverage through COBRA, it is unlikely that they will continue to subsidize the premium. They may also charge an administrative fee. In Delaware, Commissioner Stewart is working on legislation for a “mini” COBRA bill that will provide options for continued health insurance coverage for small employer groups under 20 that will allow them to pick up COBRA coverage.

• Military – Retired military veterans may be eligible to join the Defense Department’s Tricare plan.

• Individual Coverage – These plans can be expensive, especially for those who are on medications or have a chronic health condition. In some cases, preexisting conditions may make it difficult to find coverage. Starting in 2014, however, insurers will not be allowed to deny coverage based upon the health status. Shopping for an individual policy can be challenging. Make sure to compare policies carefully and ask questions about what benefits are included. Make sure to understand deductibles and coinsurance requirements; and ask about prescription drug coverage. Also, the agent or broker, as well as the insurance company writing the policy, must be licensed in the state. Be sure to check with the state insurance department to confirm the agent and company before making any payments.

• Pre-Existing Condition Insurance Plan – These plans were created to help adults with preexisting conditions find individual coverage. In order to be eligible for coverage in one of these subsidized pools, one would need to meet certain qualifications.

• High Deductible Health Plans (HDHP) – These plans only cover catastrophic health care costs. This means the insured will be responsible for paying much more of the upfront cost before the policy would pay any benefits for eligible medical expenses. HDHPs have a lower premium to compensate for the higher out-of-pocket costs incurred with these high deductibles. Often these types of plans work with a Health Savings Account (HSA) that allows people to set aside funds for future qualified medical expenses. If those who are considering an HDHP, make sure to read the policy form – paying careful attention to the benefits and the limitations of the plan.

Commissioner Stewart also recommended that retirees should clearly understand the terms and coverages of the policy they are considering. The lowest premium option may not provide the coverages that are needed for certain individuals. Questions that retirees should ask include:

• What are the deductibles or co-insurance payments?
• What are the limits on coverage?
• Can the insured see her current doctor or seek treatment in the same hospitals?
• Is there an annual limit to what the insurance company will pay for any particular coverage?
• Is there a cap on the out-of-pocket amounts the insured would have to pay?
• How often will the policy be reviewed or how often can the insured expect a premium change?
• Are prescription drugs covered?

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