Health insurance help for early retirees

Published 3:48 pm Friday, October 22, 2010

Dear Savvy Senior,

Ive read that Uncle Sam recently developed some new programs that can help early retirees who arent yet eligible for Medicare, as well as high-risk uninsured people. What can you tell me about this?

Wanting To Retire

Dear Wanting,

For early retirees who arent old enough for Medicare and who cant afford or dont qualify for an individual health insurance policy, help is now available through two new programs. Heres what you should know.&bsp; &bsp;

Early Retirement Help

If youre looking at retiring before youre eligible for Medicare, the federal government recently developed a temporary new program called the Early Retiree Reinsurance Program (ERRP) that may help you keep your employers health coverage. &bsp;

As part of the health care reform law, this new program will dole out $5 billion to employers public, private and nonprofit to help offset their costs of providing health care coverage for their early retirees ages 55 to 64 and their families. The program began in July and will continue until Jan. 1, 2014 when health insurance reform kicks in. At that point youll be able to buy affordable health insurance from insurance exchanges, and you cant be turned down for pre-existing health conditions. Ask your benefits manager or human resources department about the ERRP. &bsp;

If, however, your employer is not offering early-retiree health coverage, you may be able to purchase an individual or family policy if youre healthy (see healthcare.gov or ehealthinsurance.com to search for policies and costs), or if your health isnt so good, you can use the COBRA law.

Under COBRA, companies that employee 20 or more workers must let employees after they leave the job continue the same group coverage for themselves and their families for up to 18 months. But, its very expensive. Youll have to pay the full monthly premium yourself, plus a 2 percent administrative fee. If you have COBRA coverage for at least 18 months (with no breaks in coverage for 63 days or more), youll then qualify for rights under HIPAA (Health Insurance Portability and Accountability Act), another law that gives you the right to buy individual health insurance that doesnt exclude or limit coverage for pre-existing medical conditions. Contact your state insurance department (find the number at naic.org) or visit coverageforall.org for details.

High-Risk Plans

The second new government program you should know about is the Pre-Existing Condition Insurance Plan (PCIP). This program helps people who have pre-existing medical conditions that have been unable to get affordable health insurance.

The PCIP, which is also a result of health care reform, started in July and will run to 2014. To be eligible you must be a U.S. citizen or be residing here legally, be uninsured for at least six months, and show that you have had a problem getting insurance due to a pre-existing condition.

Currently, 35 states already offer high-risk health insurance pools (see naschip.org) to their residents with pre-existing conditions who cant get coverage, but its very expensive with premiums costing up to 200 percent the cost of private insurance.

The new PCIP, which is available in every state, will run alongside the existing state pools but will provide better and more affordable coverage. While premiums will vary by state and are age-adjusted, those enrolled in a PCIP wont pay more than a healthy person would pay in that state. A 50-year-old, for example, may pay between $320 and $570 per month. For more information on how the PCIP works in your state or to apply, go to pcip.gov or call your state department of insurance.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org.

Jim Miller is a contributor to the NBC Today show and author of The Savvy Senior book.