Planning for Healthcare Costs After FRS Retirement

When you think about retirement, you probably picture enjoying more free time, traveling, or simply relaxing after years of hard work. But one expense that can catch retirees off guard is the cost of healthcare.

For members of the Florida Retirement System (FRS), it’s important to understand what healthcare costs you might face, what benefits you have through the FRS, and what steps you can take to plan ahead.

Why Healthcare Costs Are a Key Part of Retirement Planning

Healthcare tends to become more expensive as we age. Not only do we typically require more medical care in our 50s, 60s, and beyond, but the cost of insurance premiums, out-of-pocket expenses, and long-term care can add up quickly.

For FRS members, especially those retiring before becoming eligible for Medicare at age 65, healthcare is often one of the biggest ongoing expenses in retirement.

How the FRS Health Insurance Subsidy (HIS) Helps

One benefit available to vested FRS retirees — whether you chose the Pension Plan or Investment Plan — is the Health Insurance Subsidy (HIS).

What you need to know about the HIS:

• The HIS is a monthly payment intended to help offset the cost of your health insurance premiums.

• It is not an insurance plan itself — you are responsible for obtaining your own coverage.

• The benefit is currently calculated as $7.50 per month for each year of FRS service credit, with a minimum of $45 and a maximum of $225 per month.

While the HIS doesn’t cover the full cost of health insurance, it can help reduce your out-of-pocket premium costs over time.

What the HIS Does Not Cover

Since the HIS is just a subsidy, you still need to plan for:

• Insurance premiums beyond what the HIS offsets.

• Deductibles, copays, and coinsurance for medical visits and procedures.

• Dental, vision, and hearing care (which are often not fully covered by standard health insurance).

• Long-term care (like nursing home or in-home care), which is a separate and often significant expense.

Options for Health Insurance Before Medicare

If you retire before age 65, you may need to find insurance coverage to bridge the gap until Medicare kicks in. Common options include:

• Continuing your employer coverage through COBRA, which may allow you to stay on your employer’s plan for up to 18 months (at your own cost).

• Purchasing a plan through the Health Insurance Marketplace, which may offer subsidies depending on your household income.

• Joining a spouse’s employer plan, if available.

• Exploring group retiree plans that some employers or associations offer.

Planning Tips for Healthcare in Retirement

To prepare for healthcare expenses in retirement, consider these steps:
✅ Estimate what your insurance premiums and out-of-pocket costs might be at different ages.
✅ Factor those expenses into your retirement budget — don’t assume Medicare covers everything.
✅ Consider funding a Health Savings Account (HSA) during your working years, if eligible, to build a tax-advantaged reserve for medical expenses.
✅ Evaluate whether supplemental insurance, like Medigap or long-term care insurance, fits into your plan.

Final Thoughts

Healthcare is one of the most important — and sometimes overlooked — parts of a retirement plan. While the FRS Health Insurance Subsidy can help, it’s unlikely to cover all your costs.

Understanding your options and building a plan to cover these expenses can give you more confidence as you approach retirement. If you’re unsure where to start, speaking with a financial professional who understands both the FRS benefits and broader retirement planning strategies can be a good first step.