The health insurance blues

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David and Sara Evans realized only recently that their six-year age gap threatened to leave her, the couple's younger member, medically on her own. Never mind that they have been through thick and thin together during 34 years of marriage. If David, 66, retires and accepts Medicare coverage, he does it alone as Sara, 60, is five years shy of qualifying for the federal insurance program for seniors. So David, who has health insurance through his job as a history teacher at a private New York City high school, isn't retiring anytime soon.

Sara Evans, and others like her, has few options for health coverage when a spouse retires. Chronic problems, like heart disease and arthritis, hit the elderly especially hard. The cost of controlling ongoing disease with prescription drugs must be factored into any retirement plan: While Medicare is the retiree's safety net, it doesn't cover prescription drugs. And less well appreciated is that Medicare is an individual--not a family--policy. If they are lucky, a couple might benefit from a retirement plan that includes health coverage. But increasingly, employers are dropping that costly perk.

Few options. All other possibilities for a retired couple carry substantial price tags. The spouse of a retiree on Medicare is generally eligible, through the federal COBRA law, for continued coverage under the former employer's group policy. "People say you can always do COBRA. But COBRA can be three or four times what you've been paying," says Mary Ann Holmes, 62, of Orlando. In exploring her options if her husband, John, 64, retires she discovered she was ineligible for COBRA because his company is too small. Under COBRA, the employer stops contributing to the cost of the policy, and the spouse of the retired employee pays the full premium plus 2 percent. Still, it is usually more affordable and more comprehensive than the next option, which comes when COBRA runs out.

That's when the younger spouse moves from the world of employer-sponsored group coverage to the vastly different world of individual coverage. And unlike general workplace policies, this coverage is not necessarily comprehensive and the insured may be subject to pre-existing-condition exclusions. Anything that breaks the link to employer-based coverage means that the uninsured person must act quickly--within 60 days. And nothing in the law sets a price cap.

Those ages 55 to 64 pay the highest individual insurance premiums of any age group because they use more healthcare services than younger people. Conventional policies can cost close to or more than $1,000 a month. And that presumes the insured is in good health. Because the price is so high, nearly 15 percent of people ages 55 to 64 are un-insured, with women more likely to be without coverage.

Sara Evans jokes about it. "If he retired, I don't know what I'd do. Just hang around until I qualified for Medicare, I guess," she says. But she knows that's too risky. She has had some mild heart problems. David Evans is glad that he continues to love his work. Still, he worries. "Luckily, I have good health. If I continue to work for five years, I'll be 71. While I have a good energy level now, I might not at 68. Or at 70," he says. As people factor healthcare coverage into their retirement plans, for many it means that at least one is putting off retiring until both husband and wife reach 65. John Holmes will be 65 in September and has worked as a lawyer for 38 years. He feels he cannot call it quits because his wife, who had breast cancer, could be uninsurable without his group policy. "After 38 years of doing this stuff, I really need to get some fresh air, stick my head up, and look around," said Holmes. "But if I set out to do something other than what I'm doing, we would no longer be eligible under the group policy."

The prescription drug nightmare adds to the pressure to keep working. Lary and Marilyn Belman have been married for 36 years, and, at 63, he has started thinking about retirement. But Marilyn, 64, has had extensive health problems--seizure disorder, osteoporosis, scleroderma, a balance problem, and deafness in one ear. She worked as a schoolteacher and will get disability insurance until she turns 65. But they have decided the only way they can afford her medications--which could cost up to $8,000 a year as they're not covered under Medicare--is for Lary to keep his job as a psychotherapist at a family service agency in Cedar Rapids, Iowa.

Robert Hayes hears these concerns all the time. Hayes, president of the Medicare Rights Center, an independent source of Medicare information, says seniors increasingly are postponing retirement because of health coverage worries. "A lot of people continue to work for that very reason, past 65 and into their 70s," he says. "This is the generation being hardest hit, and it's hitting women especially hard."