How will I afford Health Care when I Retire?


If you plan to retire before you’re old enough to sign up for Medicare, it’s important to consider how you will manage your healthcare expenses. With costs continuing to climb annually and the fact that people typically utilize more healthcare services when they’re older, you will need some type of financial protection. 

Below we discuss several options for how to plan for post-retirement healthcare expenses while you’re still working and the types of health insurance plans you may want to consider after retirement and before Medicare.

Use a Health Savings Account (HSA) if You Have One Available to You

You may not think that using your HSA account is a form of retirement planning, but it can be if you use it correctly. An HSA is part of most high deductible health insurance plans. It allows you to set aside tax-free dollars to pay for out-of-pocket medical expenses while also earning interest on any unused portion of the account. 

For tax year 2019, the maximum amount you can contribute is $3,500 if you have coverage for yourself only and $7,000 if you carry family coverage. You can also make catch-up contributions of up to $1,000 per year if you’re over age 55.

When you contribute the maximum each year and don’t use it all, your tax-free dollars continue to grow for you. You can access these funds after you retire to pay medical expenses and even your premiums for Medicare Part B and Medicare Part D. 

Some people even choose to pay their healthcare expenses themselves while still working in order to allow their HSA balance to grow for retirement.

Health Insurance Options to Consider

The first place many people head when they don’t have health insurance available through an employer is the open market. Unfortunately, this is an extremely expensive option just with the premiums alone. 

If you plan to work a side job or pursue any type of self-employment after retirement, you may be able to claim business expenses for a portion of your health insurance premiums and out-of-pocket costs.

Healthcare sharing programs are another consideration. Typically operated by faith-based organizations, members pay a monthly premium that they may send directly to a person in need. 

Members can request payment once they have a bill for their medical services. Compared to health insurance obtained through the open marketplace, healthcare sharing programs usually charge much less for premiums and have lower deductibles and co-payments as well. 

However, they may require you to make a statement of faith and/or refuse payment for services that go against the organization’s beliefs such as pregnancy coverage out of wedlock.

Most employers must offer health insurance at full cost to terminating employees for at least 18 months. You pay the full premium if you choose this option since your employer no longer contributes anything as an employee benefit.

Need Additional Help Formulating Your Post-Retirement Healthcare Plan?

At Aura Wealth Advisors, we understand that it can feel overwhelming to consider your options and choose the best one for you and your family. We invite you to contact us to request an appointment today.