Over the past few weeks, I’ve been on a roadshow of workshops across the country, talking to groups of pre-retirees about health insurance coverage in retirement. These particular employees are very fortunate, since their company sponsors a group retiree medical plan, and actually still subsidizes a majority of the cost.
Even so, many of these employees still experienced sticker shock when they found out the cost of the medical coverage and had not even considered the impact on their retirement income. We also spent some time reviewing how much Medicare will cost, what it covers, and how their retiree health plan will coordinate with Medicare once they reach age 65.
Some companies are moving away from even offering a group plan for their retirees, and instead are looking to offer reimbursement arrangements that provide extra cash for the retiree to buy their own health coverage.
My father-in-law was stressed out when he was notified by General Motors that they were dropping his retiree medical coverage, but was able to find a comparable Medicare supplement policy with the additional $300 he received in his monthly GM pension check to offset the termination of the retiree medical plan.
If this trend continues, it becomes even more important to educate pre-retirees on the ins and outs of health insurance. Here is what every pre-retiree should be considering:
These questions can easily be addressed by hosting an on-site workshop for employees, and the speaker should be also able to cover any concerns employees have about other retirement decisions, such as buying an LTC (long term coverage) policy or when to start collecting Social Security.
So make sure your pre-retirees have the financial education necessary to navigate through all the important decisions they face as they enter retirement, and don’t forget the often overlooked aspect of retiree medical coverage.
This was originally published on the Financial Finesse blog for Workplace Financial Planning and Education.
