Recently, we held a pre-retirement webinar for those anticipating retiring in the next 5-10 years. For those who missed the event, we wanted to share the five main points Barry touched on during the webinar. This week, we visit the question, “What happens if I get sick during retirement?” If you missed episodes one and two, we encourage you to go back and watch those. We hope you enjoy the series and find value in its contents.
Read the full transcript below.
“The third question that falls into this category is what happens if you get sick? With that, what I’m really referencing there is what are you going to do about health insurance? There are two ways to look at health insurance, or two seasons. First is insurance before Medicare, and second is insurance after Medicare.”
Transcript
Austin: We’re here in week three of our pre-retirement series, which is based off of the webinar we did a couple of weeks ago. The last couple of weeks, we’ve gone over two questions. 1: What am I going to do with my time in retirement? and 2: How much money do I need to retire? If you haven’t seen those, I encourage you to go back and watch them. This week, Barry is going to talk about what happens if you get sick during retirement. So with that, I’ll turn it over to Barry. Enjoy.
Barry: The third question that falls into this category is what happens if you get sick? With that, what I’m really referencing there is what are you going to do about health insurance? There are two ways to look at health insurance, or two seasons. First is insurance before Medicare, and second is insurance after Medicare. If you’re retiring before 65, unless you have the benefit of being able to stay on a company plan for one reason or another, or you may have a government benefit that allows you to do that outside, your choices are going to be purchasing insurance through or outside the government exchange.
There, we just advise people that if you have preexisting conditions, or if you’re on a lot of medications, it probably would be most beneficial to go through the government exchange to get your insurance. They cannot utilize preexisting conditions to deny you health insurance. It will cost more and your deductible will be higher, but you’re guaranteed to get it.
If you decide to go outside of the exchange, they can use preexisting conditions to rate you. The cost will generally be lower, but you just have that variability to be aware of.
So for Medicare, once you turn 65, there's a seven month window beginning three months before you turn 65 and four months after to sign up. If you're already taking social security and receiving your benefits at age 65, you're automatically enrolled in Medicare, both Part A and Part B. So just keep that in mind.
The last piece I would say under what happens if I get sick, would be to speak to long-term care. Statistically, it's it's shown most people will utilize some type of long-term care during their retirement. So the question would be: Do I need it? And for most, it's yes, or at least I'd like to have it. The second question, and more important, is can you afford it? It seems that most people will follow the category of I'd really like to have it, but I can't afford it. I really like to have it, but guys, I have enough resources that I can self-insure if I want to.
Then, there's people in the middle that, yes, I'd like to have it and I can afford it. When should you apply? I would say anywhere in your mid to late fifties to 65 is really the best time to apply. Hopefully before you have any kind of medical events to set in, because long-term care is becoming more and more difficult to apply for. The underwriting criteria is becoming more stringent. It's becoming more difficult to get, and the underwriting questionnaires are more strategic. I wouldn't do it before your mid fifties, but anytime you're around 60, assuming your health is good, you could certainly apply.
I would talk to your financial advisor to see if it makes sense. Can you afford it, or can you really self-insure?? Check those two categories, and then, perhaps, an application might be warranted.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Barry McCall and not necessarily those of Raymond James.
Past performance may not be indicative of future results. All investments are subject to risk. There is no assurance that any investment strategy will be successful. While we are familiar with the tax provisions of the issues presented herin, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.