Healthcare costs after retirement can be doable

By Art Koff, Banana Peel guest columnist and consulting aging expert

“Aargh,” what do you do when retirement is just around the corner and you have no idea what it will cost. You always figured you’d have this figured out by now. But you don’t…So, here’s a few ideas…

How much will you need to spend on healthcare after you retire?
What are the risks that could jeopardize your retirement plans?
What might you do now to help avoid these risks?

Fidelity Investments estimates that a 65-year old couple who retired in 2019 would spend an average of $285,000 on health care and medical expenses throughout the combined remainder of their lifetimes. The Employee Benefit Research Institute found that a 65-year-old couple could need nearly $400,000 to meet lifetime expenses in a worst-case scenario. These big dollar estimates are misleading because retirees won’t be spending this money all at once – that is, they don’t need to have it all on hand at the start of retirement; however, the totals are far more than most people planning their retirement expenses realize.

These estimates are total expenditures for healthcare that will be spread across 20 or more years of retirement. They cover the cost of Medicare deducted from your Social Security, your supplemental healthcare insurance, co-pays and drugs and other items not covered by insurance plus necessary over-the-counter healthcare needs.

Prescription drugs
Medicare Part D insurance covers most routine prescription drug costs however there are some prescriptions which are not covered and if you need one of these very expensive drugs your out of pocket costs can be huge. 

You also need to understand the next level of coverage the so-called coverage gap, or doughnut hole. After Medicare has paid their yearly maximum you must pay 100% of the cost of your drugs until your reach the next stage where once again you pay only copays for covered medications.

Traditional Medicare does not pay for most dental, hearing care or glasses. Medicare also does not pay for care in a skilled nursing facility after a patient is discharged from a hospital unless the patient was admitted to the hospital as an inpatient for at least 3 days. Observation days do not count as part of these 3 days.

Note: Do not let the emergency room administrator move you out of the ER until you are officially admitted. 

Make sure you sign up for Medicare at the right time to avoid late enrollment penalties and lengthy coverage gaps. Medicare requires enrollees to sign up during a seven-month Initial Enrollment Period (IEP) that includes the three months before, the month of, and the three months following your 65th birthday. The one exception to this is if you are actively employed at the time of your IEP, or you are on the health policy of a spouse who is actively employed. In other cases, missing the IEP triggers late-enrollment penalties that continue for life – and possibly expensive, long waits for coverage to start. 

After you enroll in Medicare there is often savings for you shop your Part D or Medicare Advantage plan coverage every year, or at least every couple years, during the annual fall enrollment season that runs from October 15th through December 7th. Even if you are satisfied with your current coverage it is a worthwhile investment of your time to look at other plans during open enrollment. Be aware that your prescription drug plan coverage can change annually and the Advantage plans can make changes to their networks of healthcare providers.

Your local State Health Insurance Assistance Program (SHIP) can assist you and provide free help with selecting the best health insurance for you. The Medicare Rights Center also offers free counseling by phone
1 800-333-4114.