For most American workers, health care can be a major obstacle to retirement. Retiring before Medicare eligibility (at age 65) can mean many retirees must provide their own health care plans. But as a federal employee, you enjoy a special privilege: You not only receive retiree health care benefits, but you can even choose your plan.
If you enjoy relatively good health and want to lock in the lowest possible premiums, you might choose a high-deductible plan that covers mostly catastrophic health risk. Or, you might prefer a more traditional Preferred Provider Organization (PPO) or Health Maintenance Organization (HMO) plan. Under these plans, you pay a co-payment for services, and enjoy very low or no deductibles.
If you plan to retire before age 65 and Medicare eligibility, you can enjoy continued health care services under your choice of retiree insurance plan. But of course, that doesn’t mean you won’t incur any health-related expenses. Before you retire, factor the following costs into your budget:
- Premiums for your chosen health insurance plan
- The cost of co-payments for doctor visits
- Annual deductibles, if any; can you afford to pay up to this limit before your benefits kick in?
- The cost of prescription medications
- The cost of any equipment or services not provided by your chosen health insurance plan
Carefully weigh all of the above factors, and make certain that you have room for them in your budget. Also, before choosing a plan you should carefully consider the state of your health and the length of time before you turn 65. Even if you enjoy reasonably good health now, how many years can you expect it to hold up before you’re eligible for Medicare? That low-premium, high-deductible health insurance plan can look attractive now, but it might be a bad bet in five years if you suffer an accident or severe illness.
Even though you enjoy the special benefit of retiree health insurance, you should still consider the impact of health care expenses upon your retirement budget. Set aside enough money to cover your out-of-pocket expenses, and remember to review your plan each year during the Open Enrollment season to be sure it still suits your needs.
