Your Guide to Health Insurance After 65

Many retirees are surprised to discover that health care costs – and insurance options – can be very different from what they experienced while working. Unless they are still working and enrolled in their employer’s group health insurance, or are eligible for Medicare at age 65, retirees will have to make a number of decisions to manage these new costs.

Most people become eligible for Medicare hospital insurance and medical Navigate here insurance at age 65. You may qualify earlier if you receive Social Security disability benefits, or have End-Stage Renal Disease or Amyotrophic Lateral Sclerosis. If you are eligible for Medicare, it’s important to sign up during the initial enrollment period. If you miss the window, you’ll pay a penalty for as long as you have Medicare.

You’ll need to decide whether or not you want to enroll in Parts A and B of Medicare, and if so, during what period. For most people, the best time to do this is during their initial enrollment period, which is the 7-month stretch around your 65th birthday that begins 3 months before you turn 65, includes your birthday month, and ends 3 months after. You’ll also need to choose a drug plan if you don’t have creditable prescription coverage at work or in another source. If you don’t choose a drug plan during your initial enrollment period, you can face monthly Part D premium penalties for as long as you have Medicare.

One option is to buy a Medicare supplement insurance policy, which helps cover the “gaps” in coverage that Medicare doesn’t pay for. Another choice is to enroll in a Medicare Advantage plan, which is private health insurance that typically covers all or most of your healthcare costs. Finally, you can consider saving money for healthcare expenses in a health savings account. Contributions to HSAs are tax-deductible and the growth is tax-deferred. Distributions are taxed as ordinary income, and a 20% penalty applies if you take them before the age of 65.

There are a number of factors to keep in mind when making these and other decisions, and we encourage you to consult with your advisor or a Medicare specialist for guidance. But by knowing what to expect, you can be prepared for the unexpected and save money on your health care costs in retirement.