How To Plan For Healthcare During Retirement

How To Plan For Healthcare During Retirement

by Nov 14, 2019Retirement Planning

Planning for retirement is always about balance. On the one hand, it’s important to make sure you have money for fun things like travel and dining out. On the other hand, you also need to make sure that basic necessities like housing and healthcare are covered as well.

Healthcare, as you can probably guess, is often the most challenging cost to plan for when you’re getting ready to retire. Many pre-retirees make the mistake of assuming that as long as they have Medicare, all their problems are solved. Sadly this is not the case.

To help you with your retirement healthcare planning, here are some basic tips to make sure you’ll have a happy and healthy retirement.

Get Familiar With Medicare

Having Medicare and really knowing how it works are two different things. Before you retire, make sure you know how all four parts of Medicare (A through D) work. We’ve already written in-depth about how each of these parts works, but here’s a quick summary:

Part A: Medicare Part A covers hospital visits. Assuming you paid Medicare taxes while you were working, there is no cost or monthly premium, all you have to do is opt-in.

Part B: Medicare Part B covers visits to your doctor and outpatient care. Monthly premiums cost between $135 and $460, depending on your income. You’ll also have copays and some out-of-pocket expenses.

Part C: Commonly known as Medicare Advantage, these are plans offered by private insurance companies that contract with Medicare. Medicare Advantage can cover parts A, B, and D, along with additional benefits such as vision, hearing, and dental. Costs for Medicare Advantage vary by state.

Part D: Medicare Part D helps cover prescription drugs. Part D can be purchased separately if you don’t want to buy a Medicare Advantage plan.

For even more details, you can visit the Medicare website.

Start A Health Savings Account (HSA)

If you have a high-deductible health plan–which the IRS defines as any health plan with a deductible of at least $1,350 for an individual or $2,700 for a family–you qualify for a Health Savings Account.

HSAs allow you to contribute pre-tax dollars (up to $3,550 for an individual or $7,100 for a family in 2020) to use for qualified medical expenses. Additionally, the funds roll over from year to year, and there are no requirements for when you need to use them.

Important Note: If you enroll in Medicare, you can no longer contribute to an HSA. Existing funds are still available, however.

Plan For Long-Term Care

It’s not fun to think about, and even less to plan for, but planning for long-term care is essential to do while you still can. Half of adults over age 65 need help with at least two or more daily living activities, such as eating, dressing, or hygiene. This means either hiring a part-time or full-time caretaker or moving into an assisted living facility.

The costs for long term care are, unfortunately, considerable. The average long-term care cost is $138,000 for men and $182,000 for women.

Because there is no way to predict with perfect certainty what your exact long-term care needs will be, it can be challenging to predict individual costs with any degree of accuracy. The safest option is to plan for the worst and hope for the best.

Start Working With A Financial Planner

If you’re not already working with a financial planner to help you plan for retirement, it’s never too late to start.

At Miles Brown, we have extensive experience helping people at all stages of life start planning and saving for retirement. To learn more about how we can help you, even if you’re already retired, please contact our office today.

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