Working beyond 65? Plan ahead for health insurance

| January 26, 2024

One of the biggest changes in retirement planning is that more and more people are working past typical retirement age. At the beginning of 2023, 19% of Americans aged 65 or older were still employed, according to the Pew Research Center. The percentage has been rising steadily since the late 1980s, when it was at 11%. This trend even extends to those age 75 and older—the Department of Labor expects 10% of this segment to be in the workforce by 2032.

There are several reasons for this: longer lifespans, the role of working in providing purpose and a social network, insufficient funds to pay for full retirement, and so on. Concern about paying for health care is also top of mind for many retirees, and we’ve been fielding a lot of questions about options from our clients.

Many recent retirees tell us they’ve been surprised at the cost. Health care insurance also is confusing enough for people who aren’t of retirement age. Just finding out whether a doctor is in your plan can require the research skills of a private detective.

And for older Americans, health care choices can be even more complicated because Medicare is added to the mix. There are several alternatives, such as private-company or employer plans. There’s also Medicare Advantage, which is a popular private-company program based on Medicare.

That isn’t all. There’s Medicare Part A, for hospital insurance; B, for medical insurance; and D, for pharmaceutical coverage. (Medicare Advantage is Part C.) You also risk penalties for late enrollment.

Circling back to people working past 65, when most sign up for Medicare: If you or your spouse are still working when you turn that age, your Medicare process is different. Factors include whether your employer has more than 20 employees or less, whether you have insurance that isn’t from your job, and whether you have insurance that isn’t available to everyone at the company. It's possible that you can have both company-provided health insurance as well as Medicare.

People often want choices, but they become confused if there are too many of them. To make your way through this maze, I suggest starting the discussions with your spouse and financial professional about post-65 health care years ahead of time. Given the current state of insurance, it’s possible that you or your spouse might make career choices significantly based on health care.

One way to get started is to look at premiums vs. out-of-pocket costs. Premiums are, as you’d expect, fairly predictable, averaging somewhere around 70%-80% of total expenses for various Medicare options, according to a T. Rowe Price study. After considering your options, you could then start estimating highly variable out-of-pocket costs. Estimates of what you’ll need are highly individual—I don’t see the point of using averages here.

You might need to work after 65 to delay retirement. But the good news is that if you find the job fulfilling, the increased activity and social engagement might have health benefits—creating the so-called virtuous circle regarding your health care insurance.


Evan R. Guido is the Founder of Aksala Wealth Advisors LLC, a 2018 Forbes Next-Gen Advisors List Member, and Financial Professional at Avantax Investment ServicesSM. Evan heads a team of retirement transition strategists for clients who consider themselves the “Millionaire Next Door.” He can be reached at 941-500-5122 or   Read more of his insights at Securities offered through Avantax Investment ServicesSM, Member FINRA, SIPC.  Investment advisory services offered through Avantax Advisory ServicesSM, Insurance services offered through  an Avantax affiliated insurance agency.  6260 Lake Osprey Dr. Lakewood Ranch, FL 34240.  The views and opinions presented in this article are those of Evan R. Guido and not of Avantax Wealth Management® or its subsidiaries.  Past performance does not guarantee future results. The S&P 500 is an index of 500 major, large-cap U.S. corporations. Standard & Poor's is a corporation that rates stocks and corporate and municipal bonds according to risk profiles. The S&P 500 is an index of 500 major, large-cap U.S. corporations. You cannot invest directly in an index.  An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency.  Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.  CDs are FDIC insured and offer a fixed rate of return.  They do not necessarily protect against a rising cost of living.  The FDIC insurance on CDs applies in case of insolvency of the bank, but does not protect market value.  Other investments are not insured and their principal and yield may fluctuate with market conditions. Investments are subject to market risks including the potential loss of principal invested.