After retiring, you could notice several of your costs starting to drop. Without needing a daily commute, your transportation expenses may decrease. Additionally, once your house is fully paid for prior to when you retire, your housing expenditures might go down as well.
However, when it comes to expenses that typically rise during retirement, healthcare stands out. As we age, health problems often become more common, and you might discover that your own contribution towards medical costs as part of Medicare can be greater than what you had expected.
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Fidelity recently provided an estimation of potential healthcare expenses for the typical 65-year-old during their retirement years. This figure stands at quite a startling $165,000.
Additionally, it’s important to remember that this estimation doesn’t include the expenses related to long-term care. These costs can be extremely high because Medicare typically does not cover them.
The positive aspect, however, is that with the correct approach
Medicare
Steps you take might result in lower healthcare expenses during your retired years. Consider these three actions seriously.
1. Register promptly
Your first shot at enrolling in Medicare lasts for seven months, starting three months prior to the month when you turn 65 and concluding three months afterward. Should you miss this window, you can still sign up during Medicare’s general enrollment phase, occurring annually between January 1st and March 31st. However, failing to join during these periods might result in additional fees added to your Medicare Part B costs.
Specifically, you will have to pay an additional 10% more for Part B throughout your lifetime for each 12-month period during which you were eligible for enrollment but did not sign up. Additionally, you may face penalties on Part D premiums if you remain uncovered by prescription drug insurance for extended periods.
When your 65th birthday approaches, make sure to allocate some time to enroll in Medicare unless you qualify for a special enrollment period. You might be eligible for this special window if you were still participating in an applicable group health plan with 20 or more individuals during your initial enrollment phase.
2. Join the annual open enrollment process each year
Every year, Medicare has an open enrollment period that starts on October 15th and concludes on December 7th. Within this timeframe, you have the opportunity to change your Part D plans for improved prescription drug coverage or make a transition between different options.
Medicare Advantage
If needed, switch to a different plan. Alternatively, you could entirely abandon Medicare Advantage if none of them meet your satisfaction and opt for traditional Medicare (comprising Parts A and B along with a separate Part D prescription drug plan).
Certain individuals choose not to participate in open enrollment as they consider the task of evaluating different plan options to be overwhelmingly complex. It’s understandable from their perspective, as this can indeed be quite challenging.
can
be daunting.
However, if you miss open enrollment, you might face increased expenses for coverage — whether through elevated monthly premiums or greater out-of-pocket payments. Both options aren’t favorable. Therefore, before deciding that navigating the comparison of various plans is too complex, try using Medicare’s plan finder tool to streamline your selection process. This tool allows you to input personalized details such as medications you use, helping you discover suitable local plans alongside their associated costs.
3. Obtain additional insurance for coverage.
You won’t qualify for a
Medigap plan
If you join Medicare Advantage, this might not be as crucial. However, if you opt for Original Medicare, purchasing supplementary insurance, also known as Medigap, at an earlier stage could prove quite beneficial.
A Medigap policy might assist in covering the expenses related to deductibles and coinsurance associated with your medical treatment. To illustrate, let’s suppose you require a 65-day hospitalization within a year. You would be responsible for paying $1,632 for the initial 60 days, followed by $408 each day for the subsequent five days. However, with Medigap coverage, you might not have to bear these costs entirely on your own.
Spending $165,000 on health care during retirement might appear daunting. However, with careful management of your Medicare enrollment, annual participation in open enrollment, and obtaining Medigap coverage, you could discover that these expenses are quite bearable.
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