You’re on Medicare, but Spouse is Too Young. What are Your Options?
A few weeks ago we read this piece on the Huffington Post: a letter written to retirement expert Jim Miller by a man about to retire with a younger spouse. “When I retire in a few months at 65 and go on Medicare,” this man wrote, “what are my wife’s (insurance) options?” (His wife is 62 and still on her husband’s employer-provided healthcare plan.) He asked Miller, “Is there some kind of Medicare coverage for dependent spouses, or do we have to purchase Obamacare?”
This question may seem a bit basic to some, but one thing we at AgingOptions have learned in our many years of dealing with retirement issues is that there is no such thing as a question that’s “too basic.” So we’re glad to link to the Huffington Post column and provide some answers to this man’s question. But as is so often the case, we believe this man may be asking the wrong question, as we’ll see in a moment.
As columnist Miller responds, there are essentially four medical coverage options that may be available to this soon-to-be retired man and his too-young-for-Medicare wife. But one option definitely not available is some form of spousal coverage under Medicare. “Medicare, unfortunately, does not offer family coverage to younger spouses or dependent children when you qualify for Medicare,” he writes. “Nobody can obtain Medicare benefits before age 65, unless eligible at a younger age because of disability.” So with that idea off the table, let’s review the coverage options for this man to consider in order to keep his wife continually insured.
Option 1: Keep working
The first option, says the article, isn’t exactly for the wife, but for the husband: perhaps he should keep working, at least for a few years longer. The letter to Jim Miller doesn’t reveal whether this man will be retiring with a pension or plans to take Social Security, but assuming it’s the latter he’ll be retiring one year shy of full retirement age. By remaining on the job, this man will boost his own benefits significantly and will also be able to keep his wife on employer medical for that much longer. Staying on the job would appear to be a win-win, increasing Social Security income and delaying the need to buy his wife her own insurance coverage.
But maybe that’s not an option. If that’s the case, then Miller offers the first of three other possibilities for coverage: the man should talk to his company’s Human Resources department before he retires and find out if there’s any provision whereby his wife could continue on his company’s coverage even after his retirement. While this may be a longshot, some firms do have a provision for retirees or their spouses to stay covered, so it’s worth having the conversation. (Of course, if the wife is working her own job, it would be wise for her to shift her coverage to her company’s plan, even if it seems more expensive, because it’s probably less pricey that some of the other options, as we’ll see.)
Option 2: COBRA for the Spouse
The second suggestion to provide coverage for the wife is the program most of us have heard of called COBRA. Believe it or not, “COBRA” stands for something very non-medical: the Consolidated Omnibus Budget Reconciliation Act, which is the law that gives workers and their families who lose employer health care benefits (in most cases) the right to maintain the coverage by paying the premiums. Any firm with 20 or more employees is required to offer COBRA benefits. COBRA will keep this man’s spouse covered for at least 18 months (a period which can sometimes be extended) but the premiums will be high – far higher than the subsidized premiums the man was paying for his wife’s coverage as an employee. COBRA can be complicated and costly, and it’s not available to everyone. If you want to read up on COBRA, click here for a link to the website of the Washington State Insurance Commissioner.
Option 3 & 4: Buy Coverage
The third choice offered by Jim Miller writing on the Huffington Post may turn out to be the most viable option, and that’s to purchase an individual health insurance policy for the wife through the Affordable Care Act, also known as Obamacare. The couple could buy a policy for the wife now and keep it in force until she turns 65. Unless Congress changes the rules, insurance plans offered under the ACA are comprehensive and companies can’t refuse coverage based on preexisting conditions. What’s more, as Miller points out, people with qualifying income levels (anything below $47,520 for an individual or $64,080 for a couple in 2017) may qualify for tax credits that can reduce premiums further. We’re including a link to the subsidy calculator on the website of the Kaiser Family Foundation which will show you what your potential savings may be.
People can also buy health coverage without going through the ACA marketplace. This can be done by contacting private insurance companies, online insurance sellers, or insurance agents. Because costs and coverage will vary widely, it’s important to get some good advice about your options before you make your choice. If you’ll contact us at AgingOptions we can review your situation with you and provide some helpful recommendations.
But why did we say that this man is asking the wrong question? Isn’t medical insurance important? Certainly it is, but it would appear to us that this man is falling into the common misconception that all these different aspects of retirement planning – medical, financial, legal and housing – fit neatly into their silos and don’t relate to reach other. This is precisely why, if we were advising this man about to retire, we would urge him and his spouse to attend one of our free LifePlanning Seminars, which we offer several times each month in locations throughout the Puget Sound area. At these highly informative events, we demonstrate how all these parts of retirement planning have to fit together into one interdependent whole – called a LifePlan – and how your family and other loved ones have to be onboard if you’re going to protect your assets in retirement and avoid becoming a burden to them as you age.
So get your retirement-related questions answered, and learn about the comprehensive approach to retirement planning that we call LifePlanning. Click here for seminar details and online registration, or call us and we’ll gladly assist you by phone. We’ll see you at a LifePlanning Seminar soon!
(originally reported at www.huffingtonpost.com)