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Baby Boomers Considering Early Retirement Should Consider
TRENTON – Many New Jersey baby boomers may be considering retiring in 2012. Those without guaranteed healthcare in retirement will face the task of bridging their coverage until reaching age 65 when they qualify for Medicare. New Jersey Department of Banking and Insurance (DOBI) Commissioner Tom Considine today reminded baby boomers thinking about retiring that they have a variety of healthcare options to consider until they become eligible for Medicare.
“New Jersey citizens thinking about early retirement may not be aware that there are a number of possible ways to maintain their healthcare insurance coverage until they age into Medicare for their health care benefits,” said Commissioner Considine. “Before retiring, consumers should review and understand all possible plans and choose the product that is best for them.”
Commissioner Considine suggested that those consumers considering retirement before the age of 65 consider the following:
If a retiree is not receiving extended healthcare insurance coverage from an employer beyond retirement, here are possible sources for continuing coverage:
Spouse’s Policy – If a spouse is still employed and has access to benefits, retirees can explore being added to the policy. While this may cost extra, it is likely to be the most affordable option. A conversation between the employed spouse and their employer’s benefits administrator or Human Resources department will help determine if this is a viable choice.
COBRA – Former employees and their dependents can keep their coverage for up to 18 months through the Consolidated Omnibus Budget Reconciliation Act (COBRA). An employer cannot refuse coverage through COBRA, but will not likely subsidize the premium and may charge an administration fee. Generally, COBRA applies to employers with 20 or more employees.
New Jersey Continuation – Another healthcare option generally available to retirees of small employers with 20 or less employees is New Jersey Continuation. Like COBRA, New Jersey Continuation lasts for 18 months and is usually not subsidized by the employer and may include administration fees.
To obtain more information on COBRA and New Jersey Continuation, go to: http://recovery.nj.gov/recovery/programs/cobra.html
Individual Coverage – These plans can be costly, particularly for consumers who are on medication or have a chronic health condition, since they generally involve significant deductibles, coinsurance and copayments. New Jersey is a guaranteed issue state, meaning that individuals with pre-existing conditions cannot be turned down for coverage. Generally, all conditions are covered by a standard plan as of the effective date, if an applicant’s prior health coverage has not lapsed. Those without prior coverage may face restrictions on pre-existing conditions for up to one year. Anyone with lapsed coverage should be especially careful in their selection process and should verify any pre-existing condition exclusions with their health plan administrator.
New Jersey offers coverage through the Individual Health Coverage (IHC) Program and NJ Protect, for uninsured citizens with pre-existing medical conditions.
Some retirees may decide that a more affordable limited benefit plan which covers catastrophic illness fits in with their financial capabilities and healthcare insurance needs until Medicare becomes available. Carriers must offer a Basic and Essential Health Care Plan (B&E Plan) in addition to offering standard individual plans. However, retirees are cautioned that B&E Plans do NOT provide comprehensive benefits like standard plans. This means retirees would be responsible for much more of the upfront cost before the policy would pay any benefits for eligible medical expenses. Often, these types of plans work with Health Savings Accounts (HSA) that permits consumers to set aside funds for future qualified medical expenses.
The Department provides shopping tools for individuals at: http://www.state.nj.us/dobi/division_insurance/ihcseh/shop_ihc.htm
Individuals retiring early from a primary employer who also maintain a small business or decide to acquire or start a new venture may be able to purchase coverage through the state’s Small Employer Health Benefits (SEH) Program.
Shopping information for small business owners is available at: http://www.state.nj.us/dobi/division_insurance/ihcseh/sehguide/index.html
Find listings for carriers to obtain healthcare insurance plan applications:
To find a healthcare insurance agent in your area: http://www.nahu.org/consumer/findagent.cfm
“Shopping for health insurance coverage before Medicare kicks in need not be overwhelming, but it does require an investment of time, work, knowledgable guidance and thoughtful planning,” said Considine. “Those individuals retiring before age 65 should make sure they understand their deductibles and coinsurance requirements. They should also ask about prescription drug coverage and above all make certain that the agent or broker and carrier involved are licensed by the State of New Jersey.”
Baby boomers looking to retire and bridge their healthcare insurance until eligible for Medicare should follow these additional shopping tips:
While New Jersey has maintained similar laws on the books for two decades, early retirees should be familiar with recent and ongoing federal changes through the Patient Protection and Affordable Care Act (PPACA). The Department has accepted federal grants to plan for a possible Healthcare Insurance Exchange that is required to be in place and operated either by the states or the federal government. New Jersey has not yet decided whether it will operate an exchange which would work as a healthcare insurance marketplace. In the meantime, individuals and small employers can continue to obtain coverage through state run programs.
Information on the PPACA can be found here: http://www.state.nj.us/dobi/division_consumers/insurance/ppaca.html
Even as they are evaluating retirement plans, consumers often find that adult children have returned home. In many cases these young adults have jobs that do not provide healthcare or they are full time students without healthcare or have lost employment and their insurance plan along with it. These early retirees face the additional challenge of getting coverage for their adult children.
Federal law provides for coverage of young adults up to age 26 while New Jersey law allows for coverage up to age 31.
Information for obtaining coverage for dependent young adults up to age 26 is found here:
Information for obtaining coverage for dependent young adults after age 26 until 31 can be found here:
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