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    Ten Tips on Health Insurance and Retirement

    The first wave of baby boomers turns 62 this year and begins claiming Social Security benefits. According to new research from the National Association of Insurance Commissioners (NAIC), many are confused about their post-retirement health insurance options, including their Medicare eligibility.

    To help sort through the confusion, NAIC offers these tips:

    1. Americans are eligible for Medicare at age 65, so take this into consideration if you plan to retire at an earlier age.

    2. If you plan to retire from your job before the age of 65 and are not eligible for Medicare, check to see if you are eligible for COBRA (Consolidated Omnibus Budget Reconciliation Act). COBRA is a federal law that typically entitles you to continue your employer’s health insurance coverage for up to 18 months after leaving a job.

    3. If you are not eligible for COBRA, you might want to consider a catastrophic or high-deductible medical plan, which typically carries lower premiums than other individual policies. Keep in mind that people with serious pre-existing health problems—such as heart disease, diabetes or multiple sclerosis—typically cannot get catastrophic health insurance.

    4. Before you become eligible for Medicare, you might want to consider purchasing a major medical plan to cover doctors’ visits, drugs and hospital care. These plans, which can vary in costs and medical benefits, include indemnity plans, preferred provider organization (PPO) plans, health maintenance organization (HMO) plans and point-of-service (POS) plans.

    5. Take time when researching individual health insurance plans and learn what kind of policies will provide the coverage you need—then pick the one best for you. To avoid purchasing a fraudulent health insurance plan, call your state insurance department and find out whether the insurance agent and company are licensed in your state.

    6. If you are 65 years of age or older and will be using Medicare as your primary health insurance, make sure you understand the different coverage options available to you. When enrolling, you will need to decide whether you want traditional Medicare or a Medicare Advantage plan. Before purchasing a Medicare Advantage plan, find out which hospitals and doctors are in-network.

    7. When enrolling in Medicare, consider purchasing a separate Medicare supplement (Medigap) insurance policy to pay for medical/hospital expenses and deductibles not covered by Medicare. Contact Medicare, www.medicare.gov, for a list of approved Medicare supplement (Medigap) insurance providers.

    8. When choosing Medicare options, you might want to consider enrolling in prescription drug coverage (Medicare Part D), which will help pay for the cost of medications prescribed by your doctor during treatment. If you choose to waive this coverage during enrollment, but enroll at a later date, you will pay a penalty fee.

    9. Be wary of health discount cards. Discount cards are not insurance! If you are considering the purchase of a health discount card, investigate whether the company is legitimate and whether any complaints have been filed against them. Also research what types of services the discount card covers and whether your physician/dentist accepts the discount card.

    10. Consider purchasing long-term care coverage. This type of insurance covers the cost of services for nursing homes, assisted-living facilities and in-home caregivers when individuals are unable to perform activities of daily living. However, long-term care insurance isn’t for everyone. If you are currently receiving Social Security or expect to have minimal or no retirement savings, you will likely qualify for state aid and should not purchase long-term care insurance. Be wary of advertising that suggests Medicare is associated with a long-term care policy. Medicare does not endorse or sell long-term care insurance.

    The NAIC offers tips and considerations through its public education program, Insure U – Get Smart About Insurance, at www.insureuonline.org.

    Your Tax Refund: Avoid the Urge to Splurge

    As the tax filing deadline nears, many people will be in an enviable position to receive a tax refund. It’s a nice surprise to get back some of the money you paid in taxes during the year. It’s also a great opportunity to make some sound financial decisions.

    Before you splurge all of your newfound funds, consider some of these money-wise alternatives from the Pennsylvania Institute of Certified Public Accountants (PICPA).

    • Pay off your bills: If you have high-interest credit cards, hefty student loans, or other debts looming over you, use some, if not all, of your refund to pay them down as much as possible.

    • Save for the future: Use your tax refund to open a savings account or deposit it into an existing account.

    • Get a head start on retirement savings: Use some of your refund dollars to start one or add to an existing account. That way, your refund can grow tax free and provide a firm foundation for your retirement.

    • Create an emergency account: Set aside some money to cover unexpected emergencies.

    • Splurge, but do it wisely: If you don’t have any high-interest debts, you already follow a regular savings plan and set aside money for retirement, then go ahead and splurge your refund. But consider indulgences that might be a good investment, such as updating your kitchen or bath, or taking other steps that will improve your home’s resale value.

    • Check your withholdings: If you regularly receive large refunds, you may be having too much money withheld from your paycheck.

    Source: The Pennsylvania Institute of Certified Public Accountants (PICPA).