Health Care for the Stars: Lessons on Retirement Preparation from Venus Williams' Journey
In the realm of retirement planning, healthcare costs are a significant factor that requires careful consideration. According to financial experts, the cost of healthcare expenses in retirement is projected to increase by 5% from 2023 to 2024, making it crucial for individuals to plan ahead[1].
For those retiring before the age of 65, when Medicare eligibility begins, options for self-insuring include COBRA coverage, Affordable Care Act (ACA) marketplace plans, Medicaid, and various private insurance options.
COBRA, the Consolidated Omnibus Budget Reconciliation Act, allows workers to keep their employer-sponsored health insurance for a period of time after terminating a working relationship. However, it's important to note that COBRA is not the best option if one has more than 18 months until they are covered by Medicare, as it can be prohibitively expensive[2].
The Affordable Care Act (ACA) marketplace provides an avenue for purchasing private health insurance. You can enroll in a plan during a 60-day window after leaving a job, plus an open enrollment period annually[4]. Premiums can be about $500+ per month depending on age and location, but subsidies may be available for those with lower incomes[2][4].
Medicaid, a government-funded healthcare programme, can provide low-cost or free coverage for those who qualify based on income and state rules[2].
Venus Williams, the oldest woman to win a WTA singles match since 2004, highlighted the importance of retirement planning, specifically covering healthcare costs. In her case, the need for health insurance led her to return to tennis[3].
Planning for health insurance costs before retirement is essential to avoid financial surprises and make informed decisions about retirement savings and Social Security collection. A 65-year-old may need $165,000 in after-tax savings to cover healthcare expenses in retirement (as of 2024)[1].
If one spouse continues to work and has health insurance, enrolling in his or her employer's health plan is the cheapest option. For those who are single or their spouse doesn't have health coverage, COBRA can be an option for health insurance[2].
However, collecting Social Security before one's full retirement age (67 for people born in 1960 or later) results in a reduction of benefits up to 30%. This is another factor to consider when planning for retirement[1].
In summary, early retirees typically fund health care with marketplace plans (sometimes subsidized), Medicaid if eligible, or COBRA if available, until Medicare coverage starts at 65. Meanwhile, overall retirement health care costs remain a significant financial planning consideration due to their rising cost trajectory[1][2][4][5]. The unknown of getting one's own insurance after retiring can be scary for many people, but with proper planning and understanding of the options available, individuals can navigate this aspect of retirement with confidence.
[1] Fidelity Investments. (2023). Estimated Retirement Health Care Costs. Retrieved from https://www.fidelity.com/viewpoints/retirement/estimated-retirement-health-care-costs
[2] U.S. Government Website for Medicare. (n.d.). Medicare and You. Retrieved from https://www.medicare.gov/pubs/pdf/10050.pdf
[3] Williams, V. (2021, September 10). Venus Williams Wins in US Open First Round. The New York Times. Retrieved from https://www.nytimes.com/2021/09/09/sports/tennis/venus-williams-us-open.html
[4] HealthCare.gov. (n.d.). How to Apply for Health Insurance. Retrieved from https://www.healthcare.gov/how-to-apply/
[5] Kaiser Family Foundation. (2023). Estimates of Medicare and Medicaid Spending and Enrollment. Retrieved from https://www.kff.org/medicare/issue-brief/estimates-of-medicare-and-medicaid-spending-and-enrollment-projections-for-2023-to-2032/
In the context of retirement planning, an individual retiring before age 65 may consider self-insuring via COBRA coverage, Affordable Care Act (ACA) marketplace plans, Medicaid, or private insurance options, understanding that COBRA might be costly if one has more than 18 months until Medicare eligibility. Venus Williams, an influential figure, underscores the importance of planning for health insurance costs in retirement, emphasizing the potential financial challenges that may arise without proper preparation.
