We all wish for those extra years, but what\u2019s the point if we\u2019re not taking care of ourselves? Without a solid healthcare plan, living longer might turn into a burden. As you age, heathcare costs can eat up a big chunk of your spending, and that\u2019s not the retirement dream anyone has in mind.<\/p>\n
One\u00a0study<\/a>\u00a0showed that between 2009 and 2019, out-of-pocket healthcare costs for adults over age 65 rose by 41% to well over $6,000 a year. Today, older Americans are spending 13% of their annual expenditures on healthcare costs. For younger Americans that number is just 8%.<\/p>\n Of course, these numbers shouldn\u2019t shock you given that surgeries, unexpected falls, memory loss, hearing or vision loss, and other routine medical expenses increase with age. However, that doesn\u2019t mean you\u2019re ready for them.<\/p>\n Medicare is the cheapest and best option for Americans over the age of 65. It is the government\u2019s health insurance program which comes with four parts: Parts A, B, C and D.<\/p>\n If you are already claiming social security benefits, you will be automatically enrolled in Medicare. This is great news because if you or your spouse paid into Medicare for at least 10 years, you get Medicare Part A at no cost.<\/p>\n If you\u2019re 65 but not yet retired, you\u2019ll need to choose which parts of Medicare to enroll in and can begin enrolling three months before your 65th birthday. You can sign up online or at your local social security office.<\/p>\n After you enroll, you may want to change your plans.\u00a0For Medicare, Parts A, B, and D, the open enrollment period begins on October 15 and ends on December 7. If you enroll by December 7, your coverage begins on January 1. For Part C (Medicare Advantage) the open enrollment period happens between January 1 and March 31.<\/p>\n As mentioned above, even with Medicare, you have some options regarding how much insurance to get. Medigap and Medicare Advantage expand those options.<\/p>\n If you want to stay on the standard Medicare A, B, and D plan, you can add on Medigap. Medigap (or Medicare Supplement)\u00a0 is a medicare supplement sold by private insurance companies to help fill the \u201cgaps\u201d in the medicare system. The government provides a full\u00a0guide\u00a0<\/a>to all your medigap options.<\/p>\n Medicare Advantage plans are also private plans that contract with Medicare. These\u00a0plans must offer all the benefits<\/a> of Medicare Parts A, B, and usually D, but they also offer things that normal Medicare does not cover. If you have Medicare Advantage, you cannot buy and do not need any Medigap.<\/p>\n Medicare Advantage makes the most sense if you have generally good health and do not anticipate requiring complex services. You\u2019ll have a yearly limit on what you have to pay out of pocket for services and, once you hit that limit, you\u2019ll pay nothing for the rest of the year, except for drug costs. However, Medicare Advantage can be more difficult to use given that all doctors are in-network for original Medicare but not Medicare Advantage.<\/p>\n At the end of the day, some medical costs are inevitable, but there are strategies to get the best deals when you go to the doctor, pick up prescriptions, or encounter other medical expenses. While healthcare pricing is not always transparent, you can\u00a0control some of the variables<\/a>\u00a0by doing a little homework.<\/p>\n Before you head to the doctor, make sure you\u2019re going in-network. Websites, like ZocDoc, can help you find doctors who take your insurance. If you\u2019re going for a check-up, making sure it\u2019s in-network should be enough, but if you\u2019re going for a specialist, call ahead to ask for a price estimate. If the procedure is not urgent, this can give you time to shop around to different hospitals or save up.<\/p>\n Sometimes, doctors will offer you something, like an ibuprofen, to make you more comfortable. While a single ibuprofen might be worth 2 cents from a grocery store, if you get it during an appointment you could be\u00a0charged $60<\/a>\u00a0or more. No matter how nice the offer sounds, don\u2019t forget to ask how much it costs.<\/p>\n If you just got a medical bill bigger than you were expecting, you have a few options. First, make sure to check your charges. Big medical procedures can be chaotic, both for you and for the staff, there\u2019s always a chance someone wrote something wrong and\u00a0charged you for a service<\/a> that you did not receive. Second, even if the bill is as big as you thought, sometimes you can negotiate with the hospital and work out a payment plan.<\/p>\n Prescription drugs can be another huge cost. If you\u2019re starting a new medication, check with your doctor to make sure the insurance covers your medication. If it doesn\u2019t, ask about generic alternatives, mail-order pharmacies or prescription assistance programs that might provide discounts.<\/p>\n Health Savings Accounts (HSAs) offer an opportunity to save early and make sure you have funds to cover your medical expenses. You cannot contribute to an HSA while you are enrolled in Medicare, so you should be contributing to your HSA through a High Deductible Health Plan (HDHP) now.<\/p>\n Because HSA balances roll over year after year, contributing while you\u2019re young and you have fewer medical expenses will build you a solid, tax-free pot of\u00a0money<\/a>\u00a0to pull from, especially if you were meeting your maximum annual contribution. If you meet a certain threshold, your HSA contributions also\u00a0become investable<\/a>\u00a0and any money you earn through those investments will also be tax free.<\/p>\n When you\u2019re retired and your medical expenses are growing, you can use the HSA to pay for medical expenses like copayments, coinsurance, and qualified medical expenses like dental, drug and vision expenses.<\/p>\n Even with good medical insurance and a full HSA, big medical bills can wreak havoc on your finances. Medical bills account for\u00a0two-thirds of bankruptcies<\/a>\u00a0in the U.S. and the best way to avoid surprise medical bills is to avoid medical surprises whenever you can. Preventive care, i.e. proactively improving your health, not only prolongs your life, but also saves you money.<\/p>\n Medical expenses get higher when you\u2019re going in for emergencies or expensive surgeries. Comparing the cost of an ambulance ride\u2013about\u00a0$1,000\u00a0<\/a>depending on insurance\u2013to the cost of an annual checkup\u2013about $40 depending on insurance\u2013tells you just how expensive medicine can get when things get bad. Much like contributing to your HSA, investing in your health can pay dividends down the road.<\/p>\n Preventive care<\/a>\u00a0can be as easy as getting a good night\u2019s sleep. Taking steps to plan healthy meals, incorporate regular exercise, manage your stress, and prioritize regular doctor\u2019s visits will all go a long way to keeping you healthy. Studies show that people who get just\u00a0150 minutes\u00a0<\/a>of exercise a week can reduce risk of both heart disease and stroke, the leading causes of death in the U.S. Just think about every trip to the gym as a contribution to your retirement fund.<\/p>\n Employers and insurance<\/a>\u00a0companies also know the value of preventive care. Talk to your boss or your insurance about incentive programs to see if they give discounts for gym memberships or for you meeting \u201chealthy standards.\u201d<\/p>\n At some point, most Americans will invest in long-term care. Nearly\u00a0eighty percent\u00a0<\/a>of retirees require long-term support while one-quarter of retirees will have severe needs. As we already know, when it comes to medicine, severe means expensive. The annual national cost of a private room in a nursing home was $108,405 in 2021.<\/p>\n Most insurances, including Medicare, would not cover these long-term care expenses because they are not explicitly medical care. However, you can invest in\u00a0long-term care insurance<\/a>.<\/p>\n If you choose to invest in long-term care insurance, you should buy your plan young given that prices will\u00a0increase<\/a>\u00a0as you near retirement age or start experiencing health problems.<\/p>\n Even with the insurance, you will not get unlimited coverage. To cover the full cost, you\u2019ll likely need to draw on other savings, like your HSA savings.<\/p>\n Not all long-term care will look the same or cost the same. Long-term care can include everything from having a nurse come to your house once a day to living in a nursing home. The type of care you need will depend on your health, your budget, and your family.<\/p>\n While some questions, like exactly what type of Medicare you want or managing costs with your doctor, can wait until you are approaching retirement, some investments need to happen now. Buying long-term care insurance (this\u00a0AARP\u00a0<\/a>guide is a good place to start) while you\u2019re young will save you money. Similarly, investing in your HSA ensures you have tax free funds to spend when you need them the most.<\/p>\nUnderstanding Medicare<\/h2>\n
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\nPart A, also known as hospital insurance, covers inpatient hospital care, nursing facility care, and even home\u00a0health care<\/a>\u00a0for up to 100 days. While these may sound like long-term care services, the 100 day limit means that it comes with limitations. At the end of life, Part A also pays for hospice care.<\/li>\n
\nPart B, also known as medical insurance, covers your typical appointments including doctors, outpatient procedures, and preventive services for a monthly premium of $164.90 as of 2023.<\/li>\n
\nPart D, also known as drug coverage, covers prescription drugs. Prices will vary by your plan and income. While you are required to have both Part A and B under original Medicare, Part D is not required.<\/li>\n
\nIf you\u2019re interested in specialized plans, Part C, or the Medicare Advantage plan, are private plans that replace A and B, and sometimes Part D. We\u2019ll discuss these options in the next section.<\/li>\n<\/ul>\nAdding Medigap or Switching to Medicare Advantage<\/h2>\n
Medigap<\/h3>\n
Medicare Advantage<\/h3>\n
Managing Healthcare Bills and Prescription Drug Costs<\/h2>\n
Ask questions ahead of the appointment.<\/h3>\n
Always make sure a procedure is necessary.<\/h3>\n
Double check your bill.<\/h3>\n
Ask for the right drug for your budget.<\/h3>\n
Investing in Health Savings Accounts (HSAs)<\/h2>\n
Staying Healthy in Retirement<\/h2>\n
Planning for Long-Term Healthcare<\/h2>\n
Taking the Next Steps<\/h2>\n