Medical Insurance for Retirees

Medical Insurance for Retirees

Lack of adequate insurance coverage is one of the major healthcare issues in the United States. According to The Commonwealth Fund (2020), 8.5% of the American population, translating to approximately 28 million people, are uninsured. Although the government has made remarkable efforts to make health care accessible and affordable to as many people as problem, lack of universal coverage still poses a serious challenge to the government and economy as a whole. For retirees, the challenge may be greater considering that their employment has ended and they can no longer enjoy the cover sponsored by their employers. This paper explores the issue of healthcare insurance for retirees in the U.S.

An Overview of Health Insurance in the US

A number of insurance programs and incentives exist in the U.S., the notable ones being Medicare, Medicaid, the Children’s Health Insurance Program, and the Affordable Act. Just to mention, Medicare provides healthcare coverage to persons above 65 years as well as those below 65 years and living with end-stage renal disease or long-term disabilities. Medicaid, on the other hand, caters for low-income families, people with disabilities, and the blind. The Children’s Health Insurance Program covers children whose parents earn substantial income such that they are not eligible for Medicaid, but their income cannot allow them to enroll for private insurance. The Affordable Care Act, seeks to improve coverage by requiring as many Americans as possible to obtain insurance. It also opens health insurance marketplaces that provide premium subsidies to individuals from lower and middle income households (The Commonwealth Fund, 2020).

The Affordable Care Act has attempted to address many of the gaps existing in healthcare, but it has not offered a complete solution to the problem of universal insurance coverage. Statistics indicate that over the last few years, the uninsured population, especially the young, has been on an upward trend. For example, between 2016 and 2019, the uninsured young Americans increased in number from 26.7 million to 28.9 million. At the same time, the rate of the uninsured rose by 0.9% in the same period (Tolbert, Orgera & Damico, 2020). Without doubt, being uninsured has serious implications for individuals, families, the healthcare system, and the nation at large.

One of the major effects of lack of insurance coverage is poor health. It goes without saying that individuals who do not have insurance coverage have poor healthcare access as compared to the insured. According to Tolbert et al., (2020), 30% of uninsured adults forewent medical care in 2019 because of the high costs of healthcare. This matches research findings that indicate that uninsured persons have a lower likelihood of getting preventive services as well as cares when faced by serious health conditions as well as chronic diseases (Tolbert et al., 2020; Lickman, Himmelstein & Woolhandler, 2017).

Medical Insurance for Retirees

Based on the overview of the various insurance programs available in the U.S., it is evident that retirees in the US are covered under the Medicare scheme. Nonetheless, the truth is that access to healthcare still remains an issue of concern to retirees. This deduction is based on reports indicating that almost half of Americans nearing retirement worry that “they won’t be able to afford healthcare when they retire” (Carroll, 2020 para.1). According to the report, such concerns arise because health insurance in the US is quite costly. As such, many people nearing retirement feel less confident about their ability to afford healthcare when they retire. This is a matter of concern especially when it is considered that elderly persons are markedly vulnerable to chronic, life-threatening illnesses. For this reason, they should be able to access medical care as regularly as possible.

Secondly, healthcare has been established to be among the top ranking expenses incurred by individuals after retirement. Besides taking care of transportation as well as housing needs, retirees have to deal with the fact that they can no longer enjoy or access the health benefits sponsored by their employers or unions (Bernicke, 2021). As such, they are forced to allocate a certain portion of their retirement budgets towards healthcare costs. What this means is that healthcare costs during retirement are a significant challenge, exacerbated by the increased life expectancy and inflation in healthcare (Bernicke, 2021).

Although Medicare provides some relief from this challenge, it does not cover all healthcare costs during retirement. Estimates indicate that expenses related to healthcare consume 15% of the retiree’s yearly budget (Fidelity Brokerage Services, 2021). With the average retired couple estimated to spend around $300,000 on healthcare, healthcare may be a big challenge for retirees given that Medicare does not cater for all medical needs. This means that retirees have to dig into their pockets to offset medical bills not covered by Medicare.

Another factor that makes medical insurance an important issue for retirees in the US is that much as Medicare provides coverage, individuals must wait until they attain 65 years to enjoy the benefits. This is an issue because for some people, retirement may come as early as 62 years of age. For such, it becomes necessary to look for other options that will cater for healthcare costs until the person becomes eligible for the Medicare program (Silvestrini, 2021). For individuals who used to their employers paying their premiums for them, they may get shocked by health insurance prices.

With the above challenges, it is necessary to explore the various options available to retirees. Individuals who have retired and wish to expand the scope of healthcare coverage beyond Medicare could sign up for a program known as COBRA. COBRA is the acronym for the Consolidated Omnibus Budget Reconciliation Act, an option that can be accessed for a maximum of 18 months following retirement (Silvestrini, 2021). It is a rule that imposes a requirement on employers to provide coverage for employees following completion of service for a specified duration (Silvestrini, 2021). In simple terms, COBRA allows individuals to enjoy the same benefits as they would normally have paid in form of premiums, plus the payment made by their employer. However, eligibility for this scheme requires the individual to have been signed up in his/her employer’s medical plan during the period of employment. In addition to this, COBRA is a temporary plan, meaning that individuals must bear the costs of paying for premiums once 18 months are over.

Another option is to sign up for private insurance. A major advantage of private health plans is that they are cost effective in the sense that they are not bound by Affordable Care Act rules. As such, individuals may find a reasonable cover or plan that matches their situation. In other words, private health plans may be obtained at a substantial discount and with more stable premiums (Purnell, 2021). Nonetheless, private health plans have a limitation in that it does not cover pre-existing conditions.


In light of the above limitations and considerations, it is crucial that people plan and prepare adequately regarding their healthcare after retirement. Here are some of the measures that may be taken to achieve this:

  1. Build and beef up one’s health savings account (HSA). The advantage of having such an account is that any earnings as well as withdrawals from this account are not taxed, provided they are used to offset healthcare expenses (Epperson & Dickler, 2019). Individuals who have HSAs can reap the benefits after retirement, where they can use the earnings on their accounts to offset costs not covered by Medicare.
  2. Besides HSAs, people who have reached or are approaching retirement are advised to manage their retirement income. Precisely, the recommendation is to manage income in a manner that keeps an individual within the lowest possible tax bracket (Epperson & Dickler, 2019). Thirdly, it helps to take a long-term care plan to help retirees cater for things such as nursing home expenses as well as the need for assisted living (Epperson & Dickler, 2019).

In conclusion, the ability to access quality healthcare as and when the need arises remains an issue of concern to a significant number of Americans. This exists even with the remarkable efforts that the government has put in place to make healthcare accessible and affordable to all citizens. With the Medicare scheme created by the government, retirees can continue enjoying medical cover for certain health needs. Nevertheless, the literature reviewed in this paper reveals that there are several limitations in the available healthcare plans for retirees. For example, individuals who retire have to wait or look for alternatives until they attain the age of 65 years when they become eligible for Medicare. Because of this and other factors, it is important for individuals to secure their post-retirement years through health savings accounts and private health plans.


Bernicke, T. (2021). Early retirement health insurance: what you should know. Forbes.

Carroll, L. (2020). Many in U.S. worry about affording healthcare in retirement. Reuters.

Dickman, S. L., Himmelstein, D. U., & Woolhandler, S. (2017). Inequality and the health-care system in the USA. The Lancet389(10077), 1431-1441.

Epperson, S. & Dickler, J. (2019). Here’s how to keep healthcare costs down in retirement. CNBC.

Epperson, S. & Dickler, J. (2019). Here’s how to keep healthcare costs down in retirement. CNBC.

Fidelity Brokerage Services. (2021). How to plan for rising healthcare costs.

Purnell, C. (2021). What are your health insurance options if you retire before Medicare? Forbes.

Silvestrini, E. (2021). Healthcare costs in retirement.

The Commonwealth Fund. (2020). International healthcare system profiles: United States.

Tolbert, J. & Orgera, K. (2020). Key facts about the uninsured population.

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