Insurance at Retirement

Retirement insurance checklist (10 items)

1. 1

   Plan health coverage for the gap between retirement and Medicare (if under 65)

   If retiring before 65, you need bridge coverage until Medicare starts. Options include: COBRA from former employer (typically 18-36 months); ACA marketplace plans (often with subsidies if retirement income is low); spouse's employer plan; or retiree health benefits if your former employer offers them. Most affordable depends on income — a Roth-conversion or pension start can push you out of ACA subsidy ranges.

2. 2

   If 65+, time Medicare enrollment correctly

   Initial Enrollment Period is 7 months centered on your 65th-birthday month. If you have creditable coverage through active employment at a 20+ employee employer, you can delay Part B without penalty. COBRA is generally NOT creditable for Part B delay. The wrong timing triggers permanent late-enrollment penalties.

3. 3

   If 65+, decide Original Medicare + Medigap vs Medicare Advantage

   Original Medicare + Medigap (Plans G, N, etc.) offers broad provider access nationally and predictable costs but needs a separate Part D drug plan and excludes dental/vision/hearing. Medicare Advantage bundles everything (often $0 premium) but with network restrictions and prior authorization. The right choice depends on your providers, prescriptions, travel patterns, and risk tolerance.

4. 4

   Use the 6-month Medigap guaranteed-issue window

   For 6 months after your Part B effective date, you have guaranteed-issue rights to any Medigap plan in your state regardless of health. After this window, switching Medigap plans typically requires medical underwriting and you can be declined. This is a one-time window in most states — use it deliberately.

5. 5

   Stop HSA contributions before Medicare effective date

   Once enrolled in any part of Medicare (including premium-free Part A), you can't contribute to an HSA. Many people enroll in Part A automatically when claiming Social Security and inadvertently trigger this restriction. Stop HSA contributions in the month Part A starts to avoid excess-contribution penalties.

6. 6

   Project IRMAA exposure based on income from 2 years prior

   IRMAA increases Part B and Part D premiums when modified adjusted gross income exceeds thresholds. Medicare uses your tax return from 2 years prior. A large Roth conversion, RMD, capital gain, or Social Security start in the look-back year can trigger IRMAA. File Form SSA-44 to appeal IRMAA based on a life-changing event (retirement, work reduction, work stoppage).

7. 7

   Review and right-size life insurance coverage

   Life insurance need typically declines in retirement — debts are paid down, kids are grown, and income replacement is less critical. Many retirees can drop or convert term coverage and reduce coverage on permanent policies. But some retain coverage for estate planning, charitable giving, or to leave a tax-free benefit. Review and decide deliberately.

8. 8

   Decide whether long-term care insurance is worth pursuing

   LTC insurance pricing rises sharply with age and adverse health history makes underwriting harder. Decide while you're still in your 50s or early 60s and healthy. Alternatives include hybrid life/LTC policies, self-funding from retirement savings, or relying on Medicaid (with the planning that requires).

9. 9

   Update auto policy for lower mileage and changed garaging

   Retirees often drive fewer miles, which can lower auto premiums. Update mileage with your insurer. If retirement involves a move to a different state or county, the rate change can be significant — sometimes a substantial discount, sometimes the opposite.

10. 10

    Review beneficiaries and estate-planning coordination

    Every account with a beneficiary designation — life insurance, 401(k), IRA, HSA, brokerage — should be reviewed against current estate planning intent. Marriage status changes, deaths, and family dynamics over decades can leave outdated beneficiaries that override your will.

Related

FAQ

Do I have to enroll in Medicare at 65 if I'm still working?

Not always. If your employer has 20+ employees and you have creditable coverage through your active employment, you can delay Part B (and Part D) without penalty. Premium-free Part A is usually advisable to enroll in (it doesn't disrupt employer coverage) — but it does block HSA contributions. If your employer has fewer than 20 employees, Medicare is generally primary and you usually need to enroll at 65 to avoid coverage gaps. Confirm creditable status in writing with your employer's benefits administrator.

Will retiring at 62 give me access to Medicare?

No. Medicare eligibility starts at 65 (regardless of when you claim Social Security or retire). If you retire before 65, you need bridge health coverage: COBRA, ACA marketplace plan, spouse's employer plan, or retiree health benefits from a former employer. Don't claim Social Security thinking it triggers Medicare — they're independent.

How does retiring affect my ACA subsidy eligibility?

ACA premium tax credits are income-based. Your modified adjusted gross income for the ACA calculation includes Social Security (a portion), withdrawals from traditional 401(k)/IRA, capital gains, and any wages. Retirement often produces an irregular income year — a large Roth conversion can spike MAGI and eliminate subsidies for that year. Plan timing of conversions, RMDs, and large gains around ACA enrollment if you're using marketplace coverage.

Should I drop life insurance in retirement?

Often yes for term policies if the original purpose (income replacement, mortgage, kids' education) has passed. For permanent policies with cash value, dropping forfeits the cash value — instead, consider reducing the death benefit, taking the cash, or converting to a paid-up policy. Some retirees keep coverage for estate liquidity, charitable bequests, or because dropping it produces a tax event on cash value. Decide with awareness of the tax and family implications.

Is long-term care insurance worth buying at 65?

It can be, but it's harder to qualify and more expensive than at 55. The argument for is real: LTC costs are high and Medicare generally doesn't cover long-term custodial care. The argument against is that LTC premiums can rise sharply over time and you may pay decades of premiums without using coverage. Alternatives include hybrid life/LTC policies, self-funding from retirement savings, and relying on Medicaid (with the asset planning required). Most experts suggest deciding by age 55-65 while still healthy and insurable.