You should try to estimate these expenses prior to retirement, especially if you have a pre-existing condition. The average premium for a single retiree without a pre-existing condition for the ages 55-64 is $350 per month. The average family premium is $550 per month. For people with pre-existing conditions the premium averages $600 for a single person and $900 for a family. However, you probably do not contribute that much while still employed, and employers are increasingly offering early retirement specifically to lower the amount they pay for employees’ health insurance.
Here are the steps you should take if you are contemplating early retirement:
- Each state has different rules for individual health insurance. One insurance company may turn you down while another offers you a good premium and benefits. Go to National Association of Insurance Commissioners website, and click on your state. Check out the Department of Insurance section to learn what is available. If the web site is incomplete, there will be a consumer toll-free phone number for you to get one-on-one advice.
- Examine available benefits in light of your estimated medical expenses. Higher deductibles often mean lower premiums. For instance, if most of your expenses are for prescription drugs, you can opt for a plan that pays less for physician visits but will still cover your drug needs.
- If you are below 65 years of age, consider using a health savings account (HSA) with a higher deductible. Refer to our column on HSAs to calculate your costs for choosing this route.
- Choose a broker or insurance agent who works with retirees. Two websites that allow you to search for a qualified insurance agent by zip code are www.ahia.net and www.aoia.com. There are also a large number in websites that allow you to shop for insurance online. So far, the best we have found are www.ehealthinsurance.com, www.anthem.com, www.uhc.com, and www.healthinsurancefinders.com.
But what if you have a pre-existing condition? For early retirees, the pre-existing conditions that scare health insurers the most are high blood pressure, high cholesterol, and diabetes. Most health insurance claims for people between the ages of 55 and 64 are caused by these conditions. Here are some tips if you have a pre-existing condition:
