01 Jul Understanding Retiree Health Insurance Plans
July 1, 2025 ~ After retirement, having good health insurance coverage is essential. It is especially important when dealing with a chronic or serious medical condition. While many individuals will qualify for Medicare when they turn 65, some employers offer retiree health insurance plans for their retired employee and their spouses. These plans could help cover some costs not covered by Medicare. This blog will lay out what retiree plans are, how they work with Medicare, and more.
What are Retiree Health Plans?
Some employers and unions offer health insurance as a retirement benefit to you and your spouse. These plans are different from the typical employer group health plan that you might have during active employment, which generally ends once you retire. Not all retiree health insurance plans are the same, and not all employers offer them. Check with your employer or union to see if these plans are available and exactly what they cover.
How do Retiree Plans Work with Medicare?
Your retiree plan may require you to enroll in Medicare Part A and Part B for your full benefits to kick in. Medicare will generally pay first for your health care bills if you also have a retiree plan. If there is any amount not covered by Medicare, the bill will then be submitted to your retiree plan. Some retiree plans may limit how much they cover. Others may only cover out-of-pocket amounts once they reach a certain amount.
Additionally, if you retire before you become eligible for Medicare, the retiree plan’s benefits will likely change once you do become eligible for Medicare. It is important to get those details from your retiree plan. If you are trying to get that information before you are eligible for the retiree plan, check with your employer or union.
For more information about Medicare, visit Triage Cancer’s Medicare Resources.
How do Retiree Plans Work with Medicare Part D?
If you do not sign up for a Medicare prescription drug plan, also known as a Part D plan, you need to make sure that your retiree plan’s drug coverage is creditable. Without creditable coverage, delaying Part D may mean a lifetime penalty.
To find out if your Part D plan it is creditable, you can ask your plan.
Should I Also Look for a Medigap Plan?
Many retiree plans are similar to supplemental Medicare plans, also known as Medigap plans. A Medigap plan may cover more “gaps” left by Medicare and your retiree plan. But it is not required to have a Medigap plan in order to be eligible for retiree benefits if your employer offers them.
For more information on Medigap policies and free, confidential advice on enrolling in a Medigap policy, contact your State Health Insurance Assistance Program (SHIP).
What if I Retire Before I Turn 65?
If you retire before 65 and lose your employer-sponsored health coverage, you will qualify for a Special Enrollment Period that allows you to buy a Marketplace plan. Depending on your income and household size, you may qualify for financial assistance that can lower the monthly cost of the plan and out-of-pocket costs.
You might also qualify for low-cost coverage through your state’s Medicaid program.
You can also buy a Marketplace plan if you are already enrolled in a retiree health plan. However, you will not qualify for financial assistance based on your household size and income. If you voluntarily drop retiree coverage, you won’t qualify for a Marketplace Special Enrollment Period.
Does My Retiree Plan Need to Comply with ACA Protections?
No. Group health plans are exempt from ACA requirements in two cases. The first case is if only retirees participate. The second is those that do not cover at least two current employees. For example, retiree-only health plans:
- Are not required to extend coverage to adult children up to age 26;
- Are not required to provide free coverage of preventive health services; and
- Can have annual or lifetime dollar limits on coverage.
Can My Retiree Benefits Be Cut By My Employer?
According to the Department of Labor, private-sector employers are not required to promise retiree health benefits. This means that if they do offer a retiree health plan, they can cut it at any time, unless a specific promise has been made.
Unfortunately, a recent study showed that only 21% of employers with more than 200 employees offered retiree health benefits in 2023, down from 29% in 2020 and 66% in 1988.
It is important to find out if your plan specifically promises that cuts will not be made or it makes no mention of it. If your plan can be cut at any time, make sure you understand your other health insurance options.
What if I Am a Federal Employee?
If you are a federal employee, you may have access to health insurance coverage when you retire, if:
- You’re enrolled in health care insurance under a federal plan
- You must have been continuously covered by a Federal Employees Health Benefits Program (FEHB) program, TRICARE, or Civilian Health and Medical Program for Uniformed Services (CHAMPUS) plan for 5 years immediately before retiring, or during all of your federal employment since your first opportunity to enroll
- Your annuity payments start within 30 days
For more information about making health insurance options, visit Triage Cancer’s Health Insurance Resources.
About Triage Cancer
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