Health care coverage options in retirement: private vs. public programs

Decisions around health care coverage should be a central part of your plans, so it’s important to know your options.

More than 1 in 5 Americans (21.3 percent) are caregivers, having provided care to an adult or child with special needs.*

If you are one of the tens-of-millions of Americans who cares for a loved one with disabilities or special needs, the impact of medical bills can be unexpected and overwhelming. It can also have huge ramifications on your own ability to prepare for retirement. That’s why selecting the best health care insurance coverage for you and your family is vitally important.

Everyone’s situation is a little different, but the decisions around health care coverage should be a central part of your retirement and special needs plans, so it’s important to know your options. In general, health insurance coverage can be from a private insurance company, via your employer or the health care marketplace OR via a public program like Medicare or Medicaid.

Employer or private coverage

While employed full-time, you may have coverage as a benefit through your employer. Many employees also will have options for Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) as savings options to help cover the cost of out-of-pocket expenses.

If you leave employment, you may have Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage for a limited time. Families who lose coverage due to a work transition have the right to continue their employer coverage for a limited period of time, but they may be required to pay the entire cost of that coverage.

You may also have an employer that offers retiree health coverage that’s company-paid, or at a discounted rate. Some retirees may have Medical Savings Account (MSA) plans that combine high-deductible plans with tax-advantaged accounts to help offset costs.

Many who don’t have employer-provided coverage can purchase it through The health insurance marketplace allows individuals and small businesses to compare and purchase from a variety of available plans in their state. By using the marketplace, you may also get an income-based subsidy to cover all or a part of your premium cost.

Public programs


Medicare is a federal health insurance program for people who are 65 and older and those with disabilities, as well as with End-Stage Renal Disease. Since Medicare is a federal program, the eligibility requirements are the same, regardless of your state of residence. Medicare coverages include:

  • Medicare (Part A) hospital insurance offers basic coverage for hospital stays, post hospital nursing facility and home health care.
  • Medicare (Part B) medical insurance pays basic doctor visit and laboratory costs. It also covers some outpatient medical services, such as home health care, medical supplies and equipment as well as the cost of prescription medications.
  • Medicare Advantage (Part C) plans are a type of plan offered by a private company contracted through Medicare to provide participants with their Part A and Part B coverage.
  • Medicare (Part D) prescription coverage offers and pays some cost of prescription medications.

Medicare eligibility:

In order to qualify for Medicare, you or your loved one must meet the following criteria:

  • Age 65 or older
  • Under age 65 and receiving Social Security Disability Insurance (SSDI) for more than 24 months
  • Under age 65 with end-stage renal disease

One common misconception: Medicare pays for long-term care facilities or help with the “activities of daily living” for those aging in the home. In fact, there is only a very limited amount of coverage for skilled nursing within the first 100 days of care, and no coverage under Medicare for “custodial care” or “long-term care” which primarily include the activities of daily living and other personal needs that are not considered medical care.


Administered by the states, Medicaid is a federal-and-state-funded assistance program for low-income individuals, those with disabilities and special needs as well as people over age 65 and on Medicare. This needs-based assistance program provides vital health coverages for people with disabilities and special needs, including, but not limited to, the following:

  • Physician service payments
  • Outpatient and inpatient hospital services
  • Medical, dental and surgical services
  • Family planning services and supplies
  • Nursing facility (NF) services for people 21 and older
  • X-rays and laboratory services
  • Pediatric services
  • Federally-qualified ambulatory and health center services covered under the state plan

Medicaid eligibility

In order to qualify for Medicaid, you or your loved one must meet the following criteria:

  • Financial:
  • Have a disability or blindness
  • Residency in the state in which they’re receiving Medicaid

Other public programs

Children's Health Insurance Program (CHIP): a state-administered program that provides health insurance coverage to eligible children who don’t qualify for Medicaid due to their family’s income, but can’t afford private coverage.

Programs that help with the cost of Medicare: There are a variety of programs including PACE, Extra Help, and Medicare Savings that can help lower-income individuals cover the premiums and out-of-pocket expenses including prescriptions.

*Caregiving in the U.S.: 2020 Report. AARP and National Alliance for Caregivers, May 2020

**Caregiver Statistics: Demographics, Family Caregiver Alliance, April 17, 2019.