Episode 55 – Converting Health Benefits At Retirement


Converting Health Benefits At Retirement by Astra Financial

So, you’re about to retire and you’re thinking about what your health benefits plan will look like.  The plan you choose ultimately depends on your needs! Do you need…

  • Drug coverage?
  • Dental?
  • Eyecare?

The current plan you have through your employer may be great. But it’s always a good idea to weigh your options!

Listen to this week’s episode of The Heart of Your Money, where I talk everything health benefits!

Show Notes:

Hey there, this is episode 55. By now, you know that the most common question I get asked is, “Do I have enough to retire?” Once that is out of the way, the next most common question I get asked is, “What do I do about my health benefits once I leave my job?” 

Today, I’m going to share a few things about that. I find that clients start this conversation about a year before needed. It always comes up, you know, just kind of a random during a check-in, we’ve got the financial planning, and it’s always, “What about my health benefits?” I usually share a few things, so it’s not a surprise closer to the date. We talk about it, it puts peace of mind that it isn’t urgent that far out from retirement. It’s not a huge task, and it shouldn’t stress you out. There isn’t anything to do really, that far out. The homework or research doesn’t need to happen until a month or two before your last day of work.

So you’re asking, what is that homework? Well, it’s not hard, don’t worry. First thing, checking out from your own employer what package options your current benefits plan will offer you in retirement. How much does that cost, and what does it cover to take it over and continue in retirement? And so really just doing a little bit of research and reaching out and asking. Second thing is, then you go to some of the most common benefit providers out there and start looking at their packages. Common ones here in my province are Blue Cross, Group Medical Services. There’s, you know, a handful of them. And figure out what type of coverage is important to you, because they’re going to have, you know, add-ons or different kinds of packages that you can get for different pricing. Do you want drug coverage? Do you want to include dental, massages or eyeglasses? You can kind of, decide what is important to you and then look at those and see, okay, well, what are their limits and what does it cover? 

Then the last decision is just knowing which company you’re going to want to use based on your research. I’ll share a couple of hints and things to know when that date comes closer. You have 30 days after the last day of your employment to sign up and pick a new coverage. It’s called a conversion plan. And so you’ve got that 30-day window. And that’s why it’s nice to do that homework maybe a month or two before you actually retire. So that before that 30 days of your last day of work, you’ve got something in place. Another thing to know is that the default thinking for most retirees is to just sign up with the same provider at work.

For example, at some jobs they have Canada Life group benefits, or Manulife Benefits, or SunLife, you name the company it’s out there. Upon retirement, the company that your employer uses will send you a package giving the information. Sometimes it’s in the same package as your pension options, it comes. It will offer you the chance to continue the health benefits plan after retirement. 

Seems easy, and a lot of people think, oh, no change needed. Until they look at the price and the offering, that’s the kicker. For whatever reason – I don’t know, someone help me out, if you know out there – you know, these companies, those companies that I mentioned, they might dislike me, but I’m not sure why it is so expensive, but those are some of the most expensive packages to continue after.

In almost all cases, I helped with retirees choosing a different plan that is more affordable. Now, that really just means they go out and do the research and report back to me. So you guys are doing all the homework, but you’ve got to gather and figure out what are those things that are important to you and then really do some costs and pricing and evaluating. Especially then, another conversation that comes up is the timing of – if there’s a spouse – the timing of retiring with that spouse, because sometimes they’ll have coverage while they’re still working. But then, it’s finding out from researching well, can you sign up afterwards on their plan once they retire? So there is some coordinating. There’s a lot of conversation there. 

Now I want to also share with you this kind of hint or tip. The exception is that sometimes there is a difference with defined benefit pensions and unions. There can be a great retirement health plan that has been part of the union or employer agreement. In that case, it’s good to keep it, and they take the cost right off the monthly pension you receive in retirement.

So, if you have a defined benefit pension, that’s that life annuity that pays you every month, no matter what. Really look at the health benefits package offered. It might be a really good one.

Another hint for researching your new health benefits plan, check out your association if you’re affiliated with one. Example: engineers, when they retire, that’s your professional association, they’re going to have a great rate and option. My dad, a retired welder, and I believe that his association had a great plan option. So, check out those things first if applicable.

Oh, and another one is the Sask Retirees Association has really great options, including travel in there. If you worked for the provincial government or affiliated example, if you have a PEPP pension, you would probably qualify, and they have a great package as well. So far, people reported back to me that it’s got the best price and the best choices for them. 

That’s it for today. Biggest takeaway, your deadline to find a health benefit plan is 30 days after your last day of work, and make sure to research all the different options. Happy benefits hunting, until next week.

Take care.