Insurance For Retirees

You need insurance in retirement for the same reason that you need insurance while working: to ensure you and your loved ones have a way to pay for the things you need.

As you grow older and transition out of the workforce, take the time to consider how those needs will change and plan your insurance decisions accordingly.

Below are some of the top types of insurance you should think about before retiring.

Health Insurance

Having good, affordable health insurance is critical for retirees. The amount you spend on health insurance will go up in retirement if you no longer have an employer to share some of the costs.

Depending on your income, you may be able to find a subsidized policy through the Affordable Care Act Marketplace until you turn 65.

• Retirees over the age of 65 can get their health insurance through Medicare, which was designed for older Americans to help to lessen the financial burden of health care.

  • Most people who turn 65 may enroll in Medicare Part A (hospital insurance) without having to pay a monthly premium.

  • Medicare Part B (medical insurance) comes with a monthly premium (the standard premium is $174.70 in 2024, and increases based on income), which can typically come out of your Social Security check.

• If you need prescription drug coverage, you may also need to purchase a Medicare Part D plan (Medicare Prescription Drug plan), which comes with an additional premium.

• Medicare Advantage plans (Part C) are private health insurance plans that are an alternative to Original Medicare (Part A and B) and often come with additional benefits, including drug coverage, vision coverage and dental coverage.

• Some employers may offer to continue your group health coverage after you retire (retiree insurance). Speak to your employer before you retire to find out exactly what benefits are offered and how they work with Medicare.

Life Insurance

If you were to die prematurely, would the people that rely on you financially be OK? If the answer is “no” or “I don’t know,” you may want to consider life insurance.

Even if you have no dependents or large liabilities (like a mortgage), you still may want to think about a policy to help cover the cost of funeral expenses, which can cost between $7,000 and $10,000 on average in the United States.

Long-Term Care Insurance

Medicare alone does not cover long-term care services, which you may need as you get older.

To keep you from having to pay out of pocket if you ever need help bathing, dressing or using the bathroom on a daily basis, you can purchase long-term care insurance.  

• Long-term care insurance will reimburse you for a daily amount that is predetermined in your policy to help pay for the caregiving expenses, which can cost $125 a day on average in the U.S.

  A possible downside is that these plans are often very expensive — annual premiums can be $2,500 or higher — and they are increasing each year. The exact cost of your policy will depend on your age, the maximum coverage amount per day and the number of days (years) the policy will pay.

• Another downside to this type of insurance is that you probably won’t qualify if you are in poor health or are already receiving long-term care.

  If you do, it could end up being even more expensive. Insurance companies use medical underwriting to determine who they accept and how much to charge for policies. But each insurance company is different, so shop around before deciding on coverage.

Medicaid does cover long-term care for low-income Americans. Dual eligible beneficiaries with both Medicare and Medicaid can receive this coverage.  

Auto Insurance and Homeowners Insurance Plans

You probably won’t need to change much about your auto and homeowners insurance in retirement, but you might want to take a look at your liability coverage. You do not want to end up liable for an accident and be forced to pay large sums to cover the damage.

Look at your finances and make sure that your resources correspond to your current liability coverage.

Once you are retired, you also might be entitled to certain discounts on your insurance. Check with your auto insurance company to see if they offer any discount programs to retirees for things such as low annual miles driven or for completing safe driving courses.

If you decide to purchase a second home, you may be able to get a discounted premium on homeowners insurance if you buy it from the same company.

Medicare Supplement Insurance (Medigap)

Original Medicare (Medicare Part A and Part B) leaves some coverage gaps that could end up causing you to pay some medical expenses out-of-pocket.

Medicare Supplement Insurance, also known as Medigap, is sold by private insurance companies and helps pay for Medicare’s copayments, coinsurance and deductibles, as well as some other out-of-pocket costs.

Some Medigap plans also include additional benefits, such as foreign travel emergency coverage.

• Depending on your projected health care needs in retirement, you may want to consider also buying a Medigap plan when you sign up for Medicare at age 65.

  Original Medicare covers a lot of health care expenses, but your bill can still add up quickly, especially if you have or develop long-term health issues.

• Keep in mind that if you do not purchase a Medigap plan during your Medigap open enrollment period, you could end up being denied a policy or paying more for your plan than other people in your area. 

• Your Medigap open enrollment period begins the month you are both 65 and enrolled in Medicare Part B. At this time, you have a guaranteed issue right that says insurance providers cannot use your medical history to decide what to charge you for a policy.

• There are 10 standardized Medigap plans to choose from in most states, and each type of plan offers the same basic benefits regardless of where it is sold. The price of a plan can vary based on age, location, insurance provider and other factors.

Call today to speak with a licensed insurance agent and request a free Medigap insurance plan quote comparison.

Christian Worstell is a health care and policy writer for MedicareSupplement.com. He has written hundreds of articles helping people better understand their Medicare coverage options.