In most cases, your healthcare needs may increase as you approach retirement. Therefore, it is important to prepare for healthcare expenses before you retire. It is advisable to calculate retirement healthcare costs as an annual expense instead of as a lump sum to make it easier. The estimates for retirement healthcare costs vary depending on the individual, the type of healthcare they need, and the type of insurance plan.
Below are the ways in which you can cover healthcare costs post-retirement.
You can prepare for retirement healthcare expenses through proper retirement income planning. A large percentage of healthcare insurance costs are spent on premiums. These can be budgeted for other retirement expenses. There are other out-of-pocket expenses such as copays, deductibles, and coinsurance.
Proper planning involves deciding which health plan is best for you and getting more information about that plan. You could also plan by saving for healthcare expenses through a health savings account. The funds from health savings accounts can be used to pay for certain healthcare premiums such as Medicare and long-term care premiums.
Medicare is a government-funded health insurance program for individuals aged 65 or older and people under 65 who meet certain eligibility requirements. It helps to cover certain healthcare expenses and is divided into various parts. Original Medicare is divided into two parts: Medicare Part A and Part B. It covers inpatient and outpatient hospital and medical expenses such as skilled nursing facility care, hospice care, some healthcare services, doctor visits, ambulance rides, ER visits, durable medical equipment, and so on. Original Medicare does not cover long-term care, prescription drugs, dental, vision, and hearing. This plan involves costs such as deductibles, premiums, coinsurance, and copayments.
Medicare Part C is sold by private insurers and it combines the coverage from Original Medicare with services such as prescription drug coverage, dental, hearing, and vision.
Medicare Part D offers a standalone prescription drug plan. There are some programs such as the Part D Extra Help program or Medicaid that can help people with low income pay their healthcare costs.
Medigap insurance helps cover the out-of-pocket costs, such as copayments, coinsurance, and deductibles. Medigap insurance is offered by private insurance companies that are Medicare-approved. This plan helps reduce the out-of-pocket expenses you incur after enrolling in Medicare.
- Long-term Care
Since Medicare does not cover long-term care, you may need to purchase a long-term care insurance plan. Long-term care plans can pay a monthly benefit for long-term care for a specific amount of time or for the rest of your lifetime. Long-term care premiums may not be affordable for all retirees, but you can purchase a life insurance policy that has the option of adding a long-term care rider.
These are some of the ways in which you can cover your healthcare costs after retirement. At Massive Insurance and Financial Services, we can help you understand the ins and outs of your health insurance plans. To get started, contact us today!