Healthcare coverage options in retirement: Private vs. public programs

More than 1 in 4 Americans (63 million adults) are caregivers in the U.S.*

For the tens of millions of Americans who care for a loved one with disabilities, the impact of medical bills may be unexpected and overwhelming. These medical bills also can have huge ramifications on caregivers’ own ability to prepare for retirement. That’s why selecting appropriate healthcare insurance coverage is vitally important.

Everyone’s situation is different, but the decisions around healthcare coverage is a central part of retirement and financial planning for caregivers, so it’s important to know the options. In general, health insurance coverage can be from a private insurance company, via an employer or the healthcare marketplace, or via a public program like Medicare or Medicaid.

Employer or private coverage

While employed full time, caregivers may have coverage as a benefit through their employer. Eligible employees may also have options to contribute to Health Savings Accounts (HSAs) and/or Flexible Spending Accounts (FSAs) to use as savings options to help cover the qualified cost of out-of-pocket expenses. It's important to keep in mind that eligibility, contribution limits and use of these accounts is specifically defined by the IRS.

If they leave employment, they 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.

They also may have an employer that offers company-paid retiree health coverage at a full or 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 HealthCare.gov. The health insurance marketplace allows individuals and small businesses to compare and purchase from a variety of available plans in their state. An income-based subsidy to cover all or a part of the premium cost also may be available.

Public programs

Medicare

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 covers inpatient hospital care, skilled nursing facility care, hospice care and some home healthcare.
• Medicare (Part B) medical insurance pays the costs of basic doctor services and laboratory tests. It also covers some outpatient medical services, such as some home healthcare, durable medical equipment as well as the cost of a limited set of drugs administered in clinical settings.
• Medicare Advantage (Part C) plans are a type of plan offered by a private company contracted through Medicare to provide participants with their Parts A, B and D coverage. They can also offer extra benefits like dental or vision.
• Medicare (Part D) prescription coverage offers and pays some cost of prescription medications and many vaccines.

Medicare eligibility:

You must be a U.S. citizen or a permanent resident of the U.S. for at least five consecutive years.

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 or Amyotrophic lateral sclerosis (ALS)

One common misconception: Many people believe that Medicare pays for long-term care (“nursing homes”) 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 rehabilitative skilled nursing services within the first 100 days of care and no coverage under Medicare for “custodial care” or “long-term care” that primarily includes the activities of daily living and other personal needs that are not considered medical care.

Medicaid

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

• Physician and Nurse Practitioner services
• 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:
  • assets generally under $2,000
  • a Modified Adjusted Gross Income (MAGI) that is less than or equal to the threshold set by your state of residence
• Have a disability or blindness
• Residency in the state in which they’re receiving Medicaid

Medicaid services, coverage and rule may vary by state. Please review Medicaid information on your state’s website or go to www.medicaid.gov.

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.

The information provided here does not, and is not intended to, constitute legal or medical advice; all information and content herein is provided for general informational purposes only. The Voya® family of companies does not administer medical insurance, Medicare or Medicaid and we encourage you to reach out to your employer or the appropriate state and/or federal resources for additional information.