Big health insurance premiums catch some unaware

Soaring health costs are squeezing those not yet eligible for Medicare.
DALLAS MORNING NEWS
DALLAS -- Lee Gutowsky, who retired two years ago from J.C. Penney Co. as its catalog production manager, pays $925 a month for health insurance for himself and his wife. Enough for a mortgage payment for some people, it amounts to more than half of his pension income.
Propelled by rising health care costs, Gutowsky's premium started at about $200 a month when he retired in February 2001, more than doubled to $450 that June, and hit its current level this January.
"My wife had zero medical expense -- other than the annual physical checkups -- for 23 years. The only expense I had was also just for the physical," said Gutowsky, who's 62 and lives in Mount Vernon, Texas.
There are no easy answers for the Gutowskys. With the aging of baby boomers and severe inflationary pressures in health care, they are a part of a growing group of people -- too old to get moderate insurance rates in the retail market but too young for Medicare -- who stand to fall through the cracks in the patchwork U.S. health care payment system.
Here's the situation
Often housewives, widows, early retirees or their spouses, they face perhaps the steepest health care premiums in the country. Yet many are too wealthy for Medicaid and other social safety programs.
If they're dropped from coverage due to a serious medical condition, they may not be insurable at all until Medicare kicks in at age 65.
If you're considering early retirement, experts advise, take a close look at what your health insurance costs will be -- and what they could escalate to -- before you give up your job and its benefits.
The issue of how to insure those in the pre-Medicare age brackets has been so perplexing that even AARP, the renowned lobbying group for senior citizens, has yet to come up with viable alternatives.
Smolka Gerry, senior policy adviser for AARP's Public Policy Institute, said it is "one of the issues that has been more difficult for us. I can't say we've met the challenges."
AARP itself offers some fee-for-service plans, but they aren't major medical plans and should be used only as a supplemental plan for other major policies, she said.
Meanwhile, AARP continues to support the notion of universal coverage and has considered various policies, including the idea of opening up Medicare to give individuals an option to buy into it.
Others have spoken of tax credits and other forms of subsidies for the private market.
Employers' COBRA
For someone whose spouse becomes eligible for Medicare before he or she does, Gerry recommends staying on COBRA, the health plans guaranteed by employers for 18 months after employment is terminated.
A federal rule says the eligibility for COBRA can be extended up to three years if the retiring spouse goes into Medicare, Gerry said.
But COBRA premiums -- since employers no longer subsidize them and beneficiaries have to pay for them in full -- can provide their own sticker shock.
Meanwhile, those in the vulnerable age groups may consider delaying retirement until Medicare kicks in. Nonworking spouses may consider trying to find a job that provides health care.
"In the past 10 years, there are a growing number of people above 65 and boomers who say, 'I'm going to continue to work to pay for my health care,'" Gerry said. "And it's a very difficult problem. The presence of health care is a factor in people's decision of whether to retire."
Gutowsky, who worked for Plano, Texas-based J.C. Penney for 36 years, said he has begun to look for other options, leery of another premium increase.
"If it's about 10 percent, I can live with that. Otherwise, I'll have to look elsewhere," he said.
A Penney spokesman wouldn't comment on Gutowsky's case in particular, citing company policy. But he said many retirees have experienced triple-digit increases in health benefits since 2001. The company was struggling financially then and decided to increase the share that retirees pay for health insurance.