How Important Is Health Insurance During My Retirement?

Maintaining good health is essential to obtain the maximum enjoyment during retirement. Staying healthy can present a challenge if you don't have adequate health insurance. Depending on your age when you retire, you may need to seek alternate insurance if no longer covered by your employer's or spouse's health care plan. Otherwise, you could face serious financial difficulty.

Declining Health

• You might not think about it, but your health declines as you age. By the time you reach the "normal" retirement age of 65, you may already be experiencing the negative health effects of growing old and the need to visit the doctor more frequently. Without health insurance, you might not have the financial resources to receive the type of health care you enjoyed with an employer-sponsored health insurance plan.

Reduced Income

• Unless you have substantial savings or receive a large pension, you may be unable to maintain the same standard of living after retiring. If you must live on a fixed income, such as depending on Social Security payments, you might not have much left over for medical bills. Prescription drug costs alone can have a serious impact on your financial well-being unless your health coverage pays for some or all of their cost.

Early Retirement

• If you decide to retire before age 65, you might have difficulty obtaining health coverage until you are eligible for government-sponsored health insurance such as Medicare. As a result, you may have to go without coverage for several years, leaving you vulnerable to financial disaster if a major illness occurs. If you are contemplating early retirement, check with your employer to see how long he can offer you coverage, or explore the possibility joining your spouse's employer-sponsored plan. If you lose your coverage, you might continue it under COBRA laws for 18 months, but you will need to pay the entire employer-paid portion of the premium on your own.

Medicare

• Fortunately, government-sponsored Medicare provides health insurance coverage upon turning 65. Medicare Part A, which covers hospitalization, is available at no cost, assuming you paid Social Security taxes for at least 40 quarters while employed. Medicare Part B provides coverage for doctor visits, at a cost of $110.50 per month for most new enrollees as of 2011. You can also enroll in Medicare Part D to receive prescription drug coverage.