Part 4: Insurance After Retirement
Health Care Costs Continue to Rise
One of the largely overlooked expenses after retirement is the ever-increasing cost of health care. Today, it is not uncommon to see health care claims that exceed $100,000 for a single accident, injury or sickness — and drugs to remedy a number of illnesses can exceed $100,000 for one course of treatment!
These numbers are both staggering and alarming. PricewaterhouseCoopers (PwC) projects that medical costs are projected to climb 6.5% in 2018, with prescription drugs and outpatient services increasing 20% and 18%, respectively (PwC, 2017). With costs for medical and prescription services reaching their current levels, taking your chances without insurance is a risky proposition.
Retirees must consider the cost of their current prescription drugs, if any, along with the possible cost of any future drugs that they may be prescribed. With fewer drugs coming off of patent (becoming generic) and the increase in research and development of specialty medicine, there appears to be no end to the rising cost of prescription drugs.
Everyone is entitled to Medicare after reaching age 65 (some circumstances will allow individuals to enroll prior to age 65); however, individuals who retire before age 65 will need to arrange for some type of health insurance coverage that will protect themselves and their assets until they become eligible for Medicare.
Know Your Options
There are several options for those who will need insurance, including: Medicaid, health care exchanges (run by each individual state), coverage through the Veterans Administration and purchasing coverage through private insurance carriers. Although there are several ways to get coverage, the actual cost for the coverages varies greatly based on the carrier and the level of coverage each individual selects.
“Local 25 retirees are in a unique position when it comes to heath care coverage after retirement. Provided that they meet the eligibility requirements, retirees are allowed to remain on the health insurance plan while they utilize their dollar bank. They are also allowed to make self-payment for coverage after their dollar bank has been exhausted,” said Mike Wilcher, Local 25 benefit fund administrator.
“While the rates do occasionally change, the Board of Trustees has been diligent in trying to ensure that the cost of coverage for retirees remains both steady and affordable,” Wilcher continued. “The Board of Trustees also strives to make sure the coverage that retirees receive remains the same as it was when they were active, with one of the only differences being prescription drug coverage after they become eligible for Medicare.”
When a participant reaches age 65, they are given the option to enroll in Humana under Local 25’s group rate.
Questions about your current retirement plan, or interested in learning more? Contact Mike Wilcher, Local 25 plan administrator, at 309-794-1170 x242.