5 Things You Need to Know About Retirement and Insurance Benefits

Whether retirement is around the corner or in the future, it’s important to have a plan. That includes knowing your retirement benefits and insurance options.

Social Security is a crucial part of the income for many households headed by people 65 or older. It can keep them from falling below the poverty line.


Medicare is a national health insurance program administered by the Centers for Medicare and Medicaid Services (CMS). It helps most people over 65 meet hospital, medical, and prescription drug costs. It is not a welfare program financed by federal payroll taxes paid into Social Security by employees and employers, plus a monthly premium from beneficiaries.

Medicare has the leverage of its size to negotiate prices with healthcare providers, which results in lower copays and coinsurance charges. However, there are still annual out-of-pocket expenses, such as deductibles and yearly coverage limits.

In addition to traditional Medicare Parts A and B, a Medicare Advantage program provides bundled health insurance coverage through private companies, often including prescription drugs, dental, vision and hearing coverage. Beneficiaries should consider the pros and cons of these programs before making a choice.

Supplemental Insurance

Supplemental insurance offers an extra layer of protection and Security in the face of unforeseen life expenses. Some retirement and insurance benefits often cover costs not covered by traditional health insurance, such as dental and vision care or critical illness coverage. Some even help pay health insurance deductibles and copayments.

With fewer employers offering employer-based healthcare plans in retirement, supplemental insurance can be an important option for those who may be unable to afford coverage on their own after leaving their company. Additional policies can offer cash benefits that cover copays and deductibles or can be used for mortgage payments, utilities, groceries, and daycare.

Supplemental plans are typically not regulated by the Affordable Care Act and can exclude pre-existing conditions, impose waiting periods, or cap benefits at relatively low levels. These limitations make them less appealing to seniors than a traditional retirement or Medicare Advantage plan. In addition, supplemental insurance plans are only sometimes available through the health insurance marketplace. Instead, employers typically offer them as a voluntary benefit or purchase them directly from private insurance companies.

Life Insurance

As a retiree, you may want to consider purchasing life insurance to provide a death benefit to your beneficiary and to help offset expenses you or your beneficiaries might face during retirement. Several policies are available to meet your needs, including term and whole-life insurance.

Generally, your employee benefits end on the day you retire, and your retiree benefits start on the first of the month following your retirement date (exception: if you annuitize, see below). You have an annual open enrollment period to change your medical and dental plans and may add or drop dependents from your coverage. Plan costs vary yearly.

You can review your specific benefit information and make real-time changes by logging into Retirement Online. You should also check your beneficiary forms regularly to reflect the current situation. In addition, it’s a good idea to review the tax withholding on your benefit payments.

Disability Insurance

Typically, disability insurance replaces a portion of your income if you become disabled and can no longer work. These policies can be purchased as part of your benefits or through private companies. Some disability insurance policies provide coverage until retirement age, while others pay only for two years or to the end of your life.

Whether your disability policy pays until you reach retirement age or not, keeping this type of coverage as you move through your career is important. It will allow you to avoid depleting your savings and paying interest on debts that may accrue.

When considering private disability insurance, carefully check the policy’s terms and conditions. It will help you decide if the policy is worth the premium cost. For example, the length of the benefit period is important, as is the elimination period (the amount of time it takes before your disability payments begin). Also, look for contractual language that clearly states whether or not the policy will continue to pay beyond age 65.

Long-Term Care Insurance

Long-term care services are costly and can quickly deplete a retiree’s savings. Buying a long-term care insurance policy can help protect your financial resources.

A long-term care insurance policy typically covers home health care services and services in assisted living and nursing homes. Some policies also include an inflation protection benefit, which increases daily benefits over time to keep up with rising costs.

Insurance companies that sell long-term care insurance must abide by the Department of Insurance’s duty of honesty, good faith and fair dealing. This means they may not misrepresent a policy or use high-pressure sales tactics.

Many experts recommend purchasing a long-term care insurance policy in your mid-50s when you are still healthy enough to qualify for the best rates. However, the decision to buy this type of insurance is personal and should consider your health and overall retirement goals. A public assistance program may be better for those with limited assets than a private insurance policy. Consumer Reports offers a guide to long-term care insurance that can be helpful.