Healthcare in Retirement: An Overview

FESCH.TV INFORMIERT:

As a financial planning team, we get a lot of questions from pre retirees about health care in retirement. Although it’s often understood that Medicare is the primary vehicle for obtaining healthcare in retirement, there’s a lot of confusion about what type of Medicare you should get, and whether the coverage is comparable to what you had or have through your pre-retirement employer.

Let’s start with the basics – every retiree is automatically enrolled in Part A if they’ve paid into Medicare taxes for at least 10 years over the course of their careers. Part A only covers hospital visits and services.

Most retirees elect to enroll in Part B, as well, which has a monthly premium that’s usually standardized for individuals who fall within a predetermined income limit. Additionally, if you’re receiving benefits from Social Security, the Railroad Retirement Board, or the Office of Personnel Management, your monthly premium is automatically deducted from your benefit.

Part B covers doctor and outpatient costs, and is often compared to the “standard” health insurance people think of when it comes to healthcare through their employer.

Finally, Medicare Part D offers prescription drug coverage, and different plans cover different levels of prescriptions. Regardless of your level of Medicare coverage, you can expect to pay copayments and deductibles – just like you would with traditional health insurance.

Although Medicare covers a lot of the basic healthcare requirements for retirees, it’s also important to understand the notable holes in coverage that retirees can deal with.

One of the primary issues that our clients run into is traveling abroad. The truth is that Medicare coverage doesn’t offer very much outside of the U.S. If you plan to travel frequently, or even live abroad for all or a portion of your retirement, it’s important to look into a Medigap plan to ensure you have adequate international coverage.

Although all retirees are automatically enrolled in Medicare Part A and B when they begin taking Social Security benefits, it’s also important to consider other opportunities to reduce the impact of medical expenses on your retirement savings and cash flow.

For most, it’s inevitable that as we age, medical expenses will increase. Planning ahead for potential expenses by saving through a Health Savings Account if it’s available to you, earmarking a set amount of savings for medical expenses in retirement, or even pursuing long term care coverage can help you to reduce the risk that medical costs pose.

Have questions about healthcare and medical costs in retirement? Talk to your financial planning team. We’re here to help you navigate the role healthcare plays in your retirement.