Managing your health in retirement is as important as managing your finances. As you transition into this new phase of life or look ahead with deliberate plans, understanding the ins and outs of healthcare will help you maintain your well-being and peace of mind. This guide explores a few critical healthcare considerations retirees should know, including anyone who is being more diligent with their future retirement plans.
Learn About Medicare and Its Significance
Medicare is a vital component of healthcare for retirees. Once you turn 65, you’re eligible for this federal program, but its options can seem overwhelming at first. Medicare includes different parts—Part A covers hospital stays, while Part B handles outpatient care and preventative services. There’s also Part D, which focuses on prescription drugs. Many people also consider Medicare Advantage (Part C) plans for additional coverage.
What’s important is recognizing that Medicare won’t cover all your medical expenses. Vision, dental, and long-term care are glaring gaps. Many retirees invest in supplemental insurance, also called Medigap policies. Take the time to compare plans, evaluate costs, and ask your financial advisor important retirement questions about how Medicare fits into your broader healthcare strategy.
The Importance of Long-Term Care Planning
Did you know that nearly 70 percent of adults over 65 will require some form of long-term care during their lifetime? This makes planning for long-term care a critical step in retirement.
Assisted living facilities, in-home care, and adult daycare come significant costs, with monthly expenses ranging anywhere from $4,500 to $9,000 on average, depending on the level of care. Traditional health insurance and Medicare typically don’t cover these services which often leave retirees to explore options for long-term care insurance.
Navigating Prescription Drug Coverage and Costs
Prescription drug costs can sneak up on retirees, particularly for individuals managing chronic conditions. For this reason, Part D of Medicare—or a Medicare Advantage plan with drug coverage—should take center stage in your healthcare planning.
To reduce out-of-pocket expenses, familiarize yourself with plan formularies and choose generic drug options whenever possible. Many drug manufacturers and government programs also offer discount cards and assistance programs, which can mitigate high medication costs.
Manage Your Health Savings Account
If you’ve been contributing to a Health Savings Account (HSA), this is the time to put it to optimal use. Your HSA funds are tax-free for qualifying medical expenses, such as Medicare premiums, dental work, and prescription medications.
Unlike your pre-retirement years, you can no longer add to an HSA once you’ve enrolled in Medicare. However, your existing balance remains an exceptional tool for managing healthcare costs. Discuss withdrawal strategies with your financial advisor to maintain maximum tax efficiency for your retirement healthcare spending.
Planning for Unexpected Health Expenses
Even the most carefully designed plans can be derailed by unexpected health issues. Medical emergencies, unplanned surgeries, or sudden diagnoses often come with hefty price tags.
Setting aside an emergency fund specifically for these scenarios can provide financial stability when you need it most. It’s also wise to explore gap-filling solutions, such as supplemental insurance or critical illness insurance, to cover unforeseen costs your primary Medicare plan may not handle.
With so much to consider—now and in the future—healthcare planning can feel challenging. Make sure to discuss these healthcare considerations with your retirement or financial advisor so that when or if you’re a retiree, you feel taken care of.
