Published Thu, Jul 18 2019 12:29 PM EDTUpdated Thu, Jul 18
2019 12:55 PM EDT
Key
Points
·
A healthy 65-year-old
couple retiring in 2019 will need close to $390,000 to cover health-care
expenses, including Medicare Parts B and D, according to HealthView Services.
·
Dental care is one of
the biggest blind spots for retirees, as original Medicare doesn’t cover this
expense.
Healthy couples retiring in 2019 will have to
dig deep to cover medical expenses.
A 65-year-old couple in good health will need
$387,644 to pay for health-care costs for the remainder of their lives,
according to HealthView Services, a provider of health-care cost projection
software.
That sum includes premiums for Medicare Part B
(medical insurance) and D (prescription drug coverage), dental insurance and
out-of-pocket costs related to doctor’s exams, hearing services and more.
The estimate excludes long-term care expenses.
Here’s the kicker: The healthier you are, the
more money you’ll spend over your lifetime, due to your increased life
expectancy. drug rebates work
A 55-year-old woman in good health will spend an
average of $13,165 in annual medical costs at age 65, HealthView Services
found.
Meanwhile, a woman who’s the same age but is
also a Type 2 diabetic can expect to spend an average of $16,635 in yearly
health-care costs.
Over time the healthy retiree will pay $424,875
for medical costs, while the diabetic, with the lower life expectancy, will
pony up $266,163, the software provider found.
“Annually, the healthy person will spend less
out of pocket, but over the course of their lifetime, they will spend more
because they have additional years of expenses,” said Michael Daley, product
marketing manager at HealthView Services.
Surprise outlays
A major misconception among retirees is that
merely having Medicare coverage will keep them from shouldering large
health-care costs.
“There are significant expenses that people can
incur for services that aren’t covered by the program,” said Tricia Neuman,
director of the Kaiser Family Foundation’s program on Medicare policy.
Those expenses include the cost of assisted
living. The annual national median cost of staying at an assisted living facility hit $48,000 in 2018,
according to Genworth Financial.
Dental care is another blind spot for retirees,
as original Medicare doesn’t cover this expense.
Nearly 2 out of 3 Medicare beneficiaries — close
to 37 million people — don’t have dental coverage, according to the Kaiser
Family Foundation.
Those who do have coverage get it through
private Medicare Advantage plans, Medicaid and private plans, according to
Kaiser.
About 20% of Medicare beneficiaries who received
dental services spent more than $1,000 in 2016, Kaiser found.
“Some dental services are inexpensive, like
cleanings and annual checkups,” said Neuman. “But some are expensive, like
crowns and implants.”
Nipping out-of-pocket costs
While Medicare won’t cover all your costs in
retirement, there are steps you can take to mitigate expenses.
Still working and under 65? Fund your HSA: If you aren’t on Medicare and you’re in a
high-deductible health insurance plan, fund your health savings account.
These accounts carry three tax benefits: Your
contributions are pretax or tax deductible, and your savings will grow free of
taxes. Finally, distributions are tax-free if used for qualified medical
expenses.
You can no longer fund an HSA once you’ve
enrolled in Medicare, but you may withdraw from it to cover those health-care
costs.
Understand your plan: Get a thorough understanding of your coverage,
be it a retiree health plan or a private Medicare Advantage plan. Know your
deductibles, co-payments and co-insurance.
Know who’s in network: Got a Medicare Advantage plan? How about dental
coverage? Make sure that your doctor or dentist is in network.
Review coverage annually: Medicare open enrollment for 2020 runs from
Oct. 15 to Dec. 7. During this time, you can change from original Medicare to a
private Medicare Advantage plan or switch back to original Medicare.
Assess whether your plan still makes sense for
your needs.
“Plans change in significant ways that can
affect how much you pay in premiums and cost sharing, as well as whether drugs
are covered,” said Neuman.
“All of these plan characteristics can have a
big impact on household budgets,” she said.
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