A Guide to the 7 Best Insurance Plans for Retirement

Aside from rent and mortgage payments, health insurance is one of the biggest monthly expenses most people have. The Kaiser Family Foundation reports that the average annual premium for a single person was $7,739 in 2021 or just under $645 per month. If you’re married or have dependents, your monthly costs may be much higher. That’s why it’s so important to plan carefully for your retirement. The right plan depends on several factors, such as how old you are when you retire and what kind of coverage you need. These are the best insurance plans for retirement as of 2022.

1. Best Option for Retirees 65 and Older: Medicare

If you’re at least 65 when you retire, you may qualify for Medicare, a federal health insurance program designed to ensure that older adults have the coverage they need to maintain a high quality of life. Although Original Medicare doesn’t cover most prescription medications, you can buy a supplemental drug plan known as Medicare Part D to fill in the gaps.

Medicare Advantage covers many of the same services as Original Medicare, but the federal government doesn’t provide this coverage. Instead, private insurance companies sell Medicare Advantage Plans to their members, which may give you access to additional benefits. For example, many Medicare Advantage Plans include routine dental care and vision care, which Original Medicare doesn’t cover.

If you’re under 65, you may be able to qualify for Medicare coverage if you have a qualifying disability. In most cases, you need to receive disability benefits for 24 consecutive months before you become eligible for Medicare. Still, there are exceptions for amyotrophic lateral sclerosis (ALS) and end-stage renal disease. If you have ALS, you become eligible as soon as you begin collecting disability.

2. Best Medicare Advantage Plan: Aetna Medicare

One of the major differences between Original Medicare and Medicare Advantage is that Medicare Advantage Plans are only offered in limited service areas. In contrast, Original Medicare is available to residents of all 50 states and the District of Columbia. If you still want to sign up for Medicare Advantage due to the availability of extra benefits, Aetna Medicare is one of the best plans available. Here’s why:

  • Aetna is one of the most trusted names in health insurance.
  • Aetna Medicare is available in multiple states.
  • U.S. News & World Report ranked Aetna as one of the best Medicare companies for 2022.
  • Some Aetna Medicare plans have $0 deductibles.

Although Aetna Medicare plans are well-reviewed, you should be aware of the potential drawbacks. Unlike many Medicare Advantage Plans, some Aetna plans don’t cover medical transportation, which may increase your out-of-pocket costs. An Aetna Medicare plan may also have an annual out-of-pocket maximum exceeding $5,000.

3. Best Insurance Plan for Seniors With Limited Financial Resources: Medicaid

An older couple looking at insurance plans for retirement

When looking for the best insurance plans for retirement, don’t discount the importance of Medicaid coverage, especially if you’re on a fixed income. Medicaid provides health coverage to adults with limited financial resources, so there’s an income limit and an asset limit you must meet to qualify for the program.

If you’re 65 or have a qualifying disability, another benefit of Medicaid is that you can pair it with Medicare to reduce your out-of-pocket costs further. When you have both types of coverage, Medicare acts as your primary insurance, processing each claim according to the terms of your plan. Then the service provider sends a second claim to Medicaid, which may pay some or all of the remaining balance.

You may even be able to bundle Medicare and Medicaid with one of four Medicare Savings Programs (MSPs). MSPs provide extra help with the out-of-pocket costs associated with Medicare, such as deductibles and premiums.

4. Best Medicare Part D Supplement: AARP/UnitedHealthcare

AARP/UnitedHealthcare Medicare Part D is one of the best supplemental insurance plans for retirement due to its above-average quality ratings. The company also offers Part D coverage in every state, making it easier to keep your out-of-pocket costs as low as possible.

One potential drawback of choosing AARP/UnitedHealthcare Part D coverage is that the monthly premiums can be slightly higher than the premiums for competing plans. AARP/UnitedHealthcare also trails behind some of its competitors when it comes to making sure that plan members are taking their medications as prescribed.

5. Best Medicare Supplement: Plan G

Medicare Supplement Insurance, also known as Medigap, provides additional coverage to help you reduce your out-of-pocket expenses. As of 2022, new enrollees have access to eight plans, all of which offer varying levels of coverage. If you’re willing to spend a little extra for comprehensive coverage, then Plan G is your best option. Plan G covers the following Medicare-related expenses:

  • Part A coinsurance
  • An extra 365 days of hospital coverage if you exhaust your Part A benefits
  • Part B coinsurance/copays
  • Blood transfusions
  • Part A and Part B deductibles

Another benefit of choosing Plan G is that it provides 80% coverage for any medical expenses incurred during a foreign travel emergency. Original Medicare doesn’t cover medical services provided outside the United States, so this is a great option if you travel frequently. Several private insurance companies offer Plan G to Medicare beneficiaries.

6. Best Short-Term Insurance Plan: UnitedHealthcare

In some cases, your coverage under one plan ends before the coverage on a new plan takes effect, leaving you with a coverage gap. If you need medical services during that period, you have to pay out of pocket unless you arrange for short-term insurance. UnitedHealthcare offers the best short-term insurance plans for retirement, as each plan includes preventive care and provides access to a large network of healthcare professionals. UnitedHealthcare also offers low-deductible options.

The main drawback of UnitedHealthcare short-term insurance is that you can’t purchase a plan if you’re over 65. You also need to be aware that some states prohibit insurance companies from selling short-term policies, so UnitedHealthcare short-term insurance is only available in 24 states.

7. Best Plan Provider for Retirees Under the Age of 65: Blue Cross Blue Shield

If you retire early, Blue Cross Blue Shield offers some of the best insurance plans for retirement. One of the main benefits of BCBS is that the network extends throughout the United States, making it easier to access care when you’re traveling. As one of the oldest insurance companies in America, BCBS also has contracts with thousands of providers, enabling you to find a variety of specialists who participate in your plan’s network. BCBS also has above-average ratings and fewer complaints than many other insurance providers.

One potential drawback is that BCBS isn’t a single company but a network of companies operating in different states. As a result, you may encounter some differences in plan quality. BCBS plans can also be a little more expensive than health insurance plans offered by other companies.

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