Helping Boomer Retirees Deal With Health Care Needs

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While many baby boomers live their lives spending every cent they earn–without setting much aside for retirementthose who have built successful businesses are finding retirement to be right on schedule.

For those baby boomers who are small business owners or members of the high-net-worth market, “financially they are capable of retiring when they wanted to,” explains Robert Buxbaum, a partner and estate planning specialist with Bay Financial Associates, LLC, Waltham, Mass.

Buxbaum focuses primarily on the high-net-worth and business owner market, many members of which are baby boomers.

One issue facing these well-off boomers is health careboth hospital and medical coverage, as well as long term care planning, he says.

Just maintaining regular health insurance can be an issue, particularly for people who retire before they are eligible for Medicare (age 65). One method Buxbaum uses for these retirees is to keep them on their businesss group health insurance plan. “If they still own the business and have the discretionary ability, then thats the solution,” he says.

But for business owners who have sold their business and are retired (prior to age 65), Buxbaum usually recommends buying an individual health insurance policy with a high deductible.

Since these individual policies can be very expensive, the high deductible will help keep the costs down, Buxbaum explains.

This strategy also is effective for non-business owner boomers who may have taken early retirement from a company where they worked for a number of years, says Michael Blau, a registered representative with Farmers Financial Solutions, Kansas City, Mo. “There are a lot of people in that situation,” he adds.

Buxbaum suggests these boomers buy a policy with a deductible of $1,000 to $2,500. “Then if they really have a problem, the insurance kicks in,” he says.

“Its insurance against a catastrophic risk,” he explains.

“For a routine physical with a doctor, for nicks and bruises and colds, write the check and pay for it yourself,” Buxbaum says. “If youre going to trade paperwork with an insurance company for something like that, its going to cost you a lot more money.”

In some instances, professional boomers who have taken early retirement are able to continue coverage through their former employer. This is often the case in companies that have encouraged early retirement as part of a downsizing program, says Blau. The continued health care coverage helps motivate these people to accept an early retirement package.

The other major health care concern, long term care, is frequently brought up by baby boomers, says Terrence Kral, a partner with Kral, Goodenough & Kral, Inverness, Ill. Many boomers today are dealing with parents who are in need of long term care, he explains.

“They can see this on the horizon and they also know they are going to be living longer,” he says.

Boomer business owners who are in need of long term care insurance usually can pay for the coverage through their business. “When theres a need for long term care insurance, we try to arrange it through their business so the business can sponsor it for them,” says Buxbaum.

Otherwise, boomers who are concerned about their own long term care needs are forced to purchase a long term care policy on their own.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.