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Tips on buying health insurance

By Jennie L. Phipps ·
Wednesday, August 10, 2011
Posted: 11 am ET

Buying health insurance when you're a few years away from Medicare eligibility can be a particularly difficult part of retirement planning.

Here are some thoughts on the problem, including some insights from

  • Down the road, the new health care reform law may make buying private insurance easier, but so far it hasn't made too much of a difference. One result of reform is the formation of high-risk pools, also known as pre-existing condition insurance plans, or PCIP. Although you no longer need to be declined coverage before you can qualify for a PCIP, you still may have to be uninsured for six months.
  • Private insurance is regulated by the states and no two states are exactly alike. Generally, the easiest places to buy insurance are in states that have a "community rating" system in place -- that is, everybody who lives in the same geographic area pays the same thing not matter how old or sick they are. States that utilize a community rating or some variation on it,  include Vermont, Massachusetts, New York, New Jersey, New Hampshire and Maine. If you live in one of these states, insurance maybe expensive, but it is available.
  • If you were eligible for COBRA because you left a job, you may have received a 65 percent discount from the federal government. That discount will expire this month, pushing up your remaining three months' worth of payments by 168 percent. Despite the big increase, it's wise to keep paying because you must exhaust your COBRA eligibility to be HIPPA-eligible for a 63-day window. Being HIPPA-eligible means that in most cases, your current insurer must sell you a policy even if you have pre-existing conditions. There are no caps on the cost of these policies, but if you can't find anything that's priced more competitively, one of these policies maybe tide you over until you reach Medicare age.
  • Keith Mendonsa, consumer health insurance expert for, suggests that couples  search the private insurance market separately, especially if one of you has health issues and the other doesn't. Buying a high-deductible, low-cost policy for the healthy half of the couple and buying a more comprehensive policy for the person who might have a greater need for insurance can be a more economical solution, he says.

Paying for insurance is yet another reason why living in retirement can be expensive.

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