Healthcare
is one of the biggest expenses you'll face in retirement, so it pays to pick
the right insurance.
Katie Brockman Jul 7, 2019 at 10:15AM
When you're preparing for
retirement, healthcare expenses are probably one of the last things on your
mind. But retirees can end up spending tens (or even hundreds) of thousands of
dollars on healthcare alone during their golden years, making it one of the
most crucial costs to prepare for.
The average retiree spends
around $4,300 per year on out-of-pocket healthcare costs, according to a study
from the Center for Retirement Research at Boston College, and that doesn't
include long-term care. Medicare will help cover some
costs, but coverage is far from free, and you'll still face some out-of-pocket
expenses.
Health insurance in retirement
is widely misunderstood, which can be an expensive problem. Seventy-two percent
of adults over the age of 50 admit they don't fully understand how Medicare
works, a survey from the Nationwide Retirement Institute found, and more than
half believe that coverage is free. In order to avoid any pricey surprises,
it's important to understand which costs you're responsible for, what your
insurance will cover, and how much coverage will cost.
Your
health insurance options in retirement
Once you turn 65 years old, you
become eligible for Medicare -- but enrolling in coverage isn't as simple as it
may seem. There are different types of Medicare coverage available, depending
on your specific healthcare needs.
Original Medicare includes Part
A and Part B coverage. Part A covers trips to the hospital and other types of
emergency care, while Part B covers doctor visits and some other preventative
services. Prescription drug coverage isn't covered within Parts A or B, so
you'll need to enroll in separate Part D coverage for help with this type
of care.
Also, routine care -- such as
dental and vision care -- isn't typically covered under Original Medicare, so
you'll need to foot the bill for those costs. Keep in mind that if you have a
dental or vision emergency, Medicare typically will cover those expenses. But
for routine teeth cleanings, eye exams, etc., those will need to be paid for
out-of-pocket.
For more expansive care, you
can instead opt for a Medicare Advantage plan. These plans are
similar to the type of insurance you likely have through an employer, in that
they typically cover everything from hospital visits to prescription drugs to
routine care. The downside, then, is that this type of coverage is often more
expensive than Original Medicare.
The
costs of healthcare coverage
No matter which type of
coverage you choose, you'll still be responsible for all premiums, deductibles,
copayments, and coinsurance. For the lowest monthly payment, you can choose to
go with Original Medicare -- but you'll face higher out-of-pocket expenses.
With an Advantage plan, you'll likely have higher premiums, but greater
coverage and fewer out-of-pocket costs.
Most people won't pay a premium
for Part A coverage as long as you've paid Medicare taxes for at least 10
years, but you will have a deductible of $1,364 per benefit period -- which
begins when you're admitted to a hospital and ends 60 days after you leave the
hospital. Then with Part B coverage, the standard premium is $135.50 per month,
but it may be higher depending on your income. Part B also has a deductible,
though it's just $185 per year.
If you also enroll in Part D
coverage, that will be an additional cost. This type of insurance is offered
through private, Medicare-approved providers, so prices will vary based on your
individual plan, but the maximum deductible for 2019 is $415 per year.
Medicare Advantage plans are
also offered through third-party insurance companies, so rates can vary widely
based on your location, the provider, and the amount of coverage you're
receiving. But you'll typically still have to pay a premium, usually along with
the standard Part B premium as well.
Because prices differ based on
the plan, be sure to shop around for the best rates if you choose an Advantage
plan. Some plans offer low or even $0 premiums, but you may be stuck with a
high deductible or less-than-ideal coverage. Or other plans may charge higher
premiums, but you might have more coverage and a lower out-of-pocket maximum.
Consider what your healthcare needs may look like in retirement, then choose
the option that will provide the most bang for your buck.
Health insurance can be
confusing, particularly in retirement. Medicare can be a lifesaver, but choose
the wrong type of plan for your needs, and you could end up paying thousands
more than you need to. Do your homework beforehand about your insurance options
and what they'll cost, though, and you'll ensure you're as prepared as possible
for these expenses in retirement.
No comments:
Post a Comment