What Will I Worry About Now?

I have had one overriding worry since I retired:  health insurance.  I've read the horror stories about obtaining health insurance and worried that even if we could get coverage, the cost would be bankrupting.  I handled this worry the way I handle most of my worries, denial and procrastination.

Well, it's not that bad; here's what I learned:

Do not pass up COBRA coverage when you leave your job.  This is pretty much the only guarantee that you will be able to obtain reasonable coverage in the future.  When you leave your job, you can elect COBRA coverage to continue the insurance you had while you were employed for an additional 18 months.  (Your state may extend this period even longer.)  Our monthly premium under COBRA was $600.

Start shopping immediately for an individual policy.  I knew I could save on our premium if we could purchase a plan with a higher deductible.  I contacted a broker.  She told me that because of our health history, we were not insurable and it was not even worth submitting our application to insurers.  She recommended that we stay on COBRA for the full COBRA period because at the end of that time we would be guaranteed coverage under HIPAA.

After you exhaust your COBRA coverage, you are guaranteed coverage under HIPAA.  In California (very helpful publication here) the rules require that insurers offer their 2 most "representative" policies to those that are eligible for guaranteed issue.  The cheapest policy I could find on-line under guaranteed issue would have doubled our premiums to more than $1,200.  (It's guaranteed coverage, not guaranteed to be cheap!)

Do not rely exclusively on insurance brokers.  When you apply for an individual policy outside of the guaranteed issue provisions, you must go through the insurance company's underwriting process, which includes providing a very detailed health history.  At the end of this process, they are not required to offer you insurance.

Before our broker told us we were uninsurable, I had already submitted an application for an individual policy directly with an insurance company.  Turns out we are insurable and at a premium half the cost of my COBRA coverage!  (I'm not sure why the story was different from a broker--perhaps the commission structure?)

Select your policy carefully; this may be the policy you have for many years.  HIPAA insures guaranteed renewability of your individual policy as long as you keep paying the premiums on time (although the cost will surely rise.)  If you change your mind down the road, you may not be able to obtain the coverage you want.

Most importantly, do not let coverage lapse.  Your options become very limited if you ever let coverage lapse.

I hope we are fortunate enough to enjoy excellent health and that the insurance company makes a fortune off of us as a consequence.

Comments

[Cheryl]

It's a sad state of affairs when retirees are forced to pay that kind of money for insurance. This is a good article, I've done my share of looking into it a couple of years ago when I really wanted to leave my job.

So, I'm staying with my current employer (I work for VA) until my minimum retirement age (in less than a year!!!) so that I can continue to get the same coverage I have now at the rate I am currently paying as an employee.

Good luck with this. Maybe the next administration will start to fix this mess. I wrote a post on Bumrungrad Hospital in Bangkok you may want to read.

[Retired Syd]

It is totally worth hanging on to get your health coverage, it can certainly add a significant cost to the retiree budget! My sister-in-law has the same type of deal with the L.A. Unified School District, well worth the few extra years.

I did read your post about Bumrungrad--what a beautiful facility. Hard to believe!

Syd

[Wicked in San Jose]

So glad that you got that taken care of!!!

So What WILL you worry about now????

Can't wait for your next installment!

Sara

[New at this]

Syd -- Well, its official!!! We gave notice, had the going away dinner, talked to fellow workers who were "shocked" that we were leaving such a "wonderful" position, etc, etc....But as we now sit here with our list of things we have to do immediately..., to our naive surprise, getting health insurance has bubbled to the top of our list....

Long story but as we've travelled the maze of brokers, et al on this topic, until reading your article, I thought we just unlucky.

Similar to you, we've been told all sorts of fibs by a very personable brokers....The first, similar to your story above, is that we were uninsurable. Well, also similar to you, that turns out to be not true. And we now actually have two companies competing for our business. But before we had two companies working with us, we were told by a third that that "the law prevents you from submitting an application to more than one company at a time"...! (complete fabrication) I could go on but the basic point of my note is to say thank you for "going first" and leaving a bread crumb trail behind...!

P.S. Any insights on Assurant versus Humana?

[Retired Syd]

New at this: Well congratulations! Be sure to stay on COBRA while you are sorting it all out. Right now you want continuous coverage in order to be guaranteed insurance. I hope this exercise will get easier in 2014 when the new health care law is fully in effect and you can shop for insurance on state exchanges.

I don't have any insights on either of those insurers--Aetna and Blue Shield are the big carriers here in California. Good luck with it and welcome to retirement!