Health Insurance in Retirement: Navigating Medicare, the N.Y. State of Health Individual Marketplace, and COBRA

Retirement can bring many challenges, including how your health, dental and vision insurance needs will continue outside of employment. Depending on your age at retirement, you may have three different options available: Medicare, individual coverage through the N.Y. State of Health Marketplace, or COBRA. Here is a guide for which option is the best fit for your well-deserved retirement:

Medicare: Parts A & B and Medicare Advantage Plans

Eligibility for Medicare occurs when you turn 65 or are considered disabled by the Social Security Administration for 24 straight months. For the majority of individuals, there are four parts of Medicare that provide them with the coverage they need:

  • Part A is the standard benefit for hospital insurance. If you worked 40 quarters (i.e., 10 years), you are eligible for Part A coverage at no monthly premium.
  • Part B is the standard benefit for outpatient medical insurance. The monthly premium for Part B is dependent upon your household adjusted gross income from two years prior. The cost for Part B can be found here for the current year.
  • Part C is the part of Medicare known as Medicare Advantage. These plans provide coverage for the services that are covered in Part A & B at a richer benefit for the subscriber. Many Medicare Advantage plans also include prescription drug coverage and provide benefits that meet the Part D requirement. You must have Parts A & B in place in order to enroll in a Medicare Advantage plan.
  • Part D provides prescription drug coverage. In most situations, this is included in the Medicare Advantage plan. Based on your income from two years prior, you may also pay a monthly premium known as IRMAA (income-related monthly adjustment amount). The chart for the IRMAA amounts can be found here.

Signing up for Medicare Part A & B through the Social Security Administration, and a Medicare Advantage plan through a trusted advisor, can be the most beneficial option at 65, regardless of whether you retire or continue to work. In many instances, the total monthly cost for Medicare-eligible individuals amounts to $135.50 and provides benefits at a comparable level to a Gold- or Platinum-level plan on the commercial group marketplace.

There are specific periods in which you can enroll in a Medicare Advantage Plan. It is important to plan ahead and make sure that when Medicare and Medicare Advantage becomes the best option for you, you are ready to sign up for the parts that you need. Here is an enrollment period guideline:

  • Initial Enrollment Period (IEP): a seven-month window to sign up for Part A, B and a Medicare Advantage Plan. This enrollment period coincides with your 65th birthday, beginning three months prior to your 65th birthday, continuing through the month of your birthday, and ending three months following that birthday.
  • Annual Enrollment Period (AEP): scheduled every year between October 15 and December 7. Individuals are able to make plan changes during this time for an effective date of January 1.
  • Special Enrollment Period (SEP): Available when an individual experiences a qualifying event outside of the IEP or AEP. Most common SEPs are retirement or moving to a new residence that is not in the service area of the currently enrolled Medicare Advantage plan.

New York State of Health Individual Marketplace or COBRA:

If you are lucky enough to retire prior to age 65, the N.Y. State of Health Individual Marketplace or COBRA may be the best option for continued coverage for medical, dental and vision needs without experiencing a lapse in coverage. The N.Y. State of Health Individual Marketplace provides a platform to enroll in coverage through private insurance carriers. Based on your household size, projected adjusted gross income for the year in question, and your county of residence, you may be eligible for an advance premium tax credit that can be deducted from your total monthly premium, making your monthly cost lower. Eligibility for Medicaid and the Essential Health Plan (New York’s expanded Medicaid program) is also available through the N.Y. State of Health website if a household’s income falls below 200% of the Federal Poverty Level. Once you turn 65, you are no longer eligible for insurance through the N.Y. State of Health and must move over to Medicare and the parts described in the previous section.

COBRA is an option that may be available to continue your employer-sponsored benefits when you are no longer employed. When enrolling in COBRA, the participant pays 102% of the total premium costs, which can be an expensive monthly premium. COBRA becomes a viable option for individuals if they have already met their deductible or out-of-pocket maximum. By reaching these limits, the benefits of the policy are maximized and will provide you with the best coverage possible for the rest of the policy year, which may be worth the higher monthly premium.

With all of these options and scenarios, it’s helpful to have someone experienced by your side to help you determine the best path for you. Feel free to reach out to me to learn more about how Bond Benefits Consulting can assist you or someone you know in navigating their health, dental and vision insurance options upon retirement.; 585-248-5870, ext. 157