The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living

Chapter 7. Managing Your Health-Care Expense Burden

A good friend is planning to throw herself a Medicare birthday party when she turns 65 a few years from now. She lost her employer-sponsored health insurance several years ago after retiring early, and has struggled along ever since with an individual insurance policy that features high deductibles and limited coverage. She thinks Medicare will solve all her health insurance problems.

It's true that Medicare is fairly comprehensive—and very popular with beneficiaries. But Medicare doesn't cover everything—long-term care, for example. And it's not a free lunch. You'll pay premiums to receive some Medicare benefits, such as physician services and drug benefits. Insurance premiums and out-of-pocket expenses will make health care one of your most significant expenses in retirement—and one that can pose a major threat to retirement security.

The nation's health-care system is in crisis; the recent national health-care reform debate focused attention on exploding costs, rising use of services, and a patchwork insurance system that leaves many Americans uncovered. The new reform law is good news—and not only for retired people. The crisis is especially acute for the uninsured, a group that includes a broad cut of the population across age groups. If you're age 65 or older, Medicare provides an important safety net. But there is a large and growing group of uninsured people in their fifties and early sixties who have been forcibly retired ...