Understanding how to pay for Medicare health plans after retirement

Paying for Medicare Health Plans After Retirement

Living a long healthy life is the goal of most Americans. And with the average retirement age being 62, planning for health care costs during retirement is crucial.

Health care costs can be unpredictable. Health care inflation continues to grow at a rate higher than the general inflation rate. It’s one of the most significant expenses retirees will face.

There are many considerations regarding when to draw from your Social Security or when actually to stop working. For most retirees, the likelihood of having an employer- or union-sponsored retiree health care benefits plan is low. Because of this, it’s important to start preparing early.

Understanding Your Health Care Costs During Retirement

According to Fidelity, the average 65-year-old couple will spend about $295,000 during retirement on their health care coverage. This doesn’t include any expenses for long-term care. Long-term care services can reach up to $8,000 per month for a private room in a nursing home.

Costs will be different for each person, though. It all depends on your age, income, health status, location, and Medicare eligibility.

Start Early to Prepare for Costs

There are several ways you can start early preparing for expenses. Here are five tips:

  1. Save money in a tax-free savings account. If you are working and currently have a high deductible health care plan, consider contributing to a Health Savings Account (HAS). You can contribute to this tax-advantaged account up until you enroll in Medicare, even if you’re not working.
  2. Consider your desired retirement age. Medicare begins at age 65, and if you retire at that age, you might consider continuing your coverage under your employer’s plan using COBRA for up to 18 months. Keep in mind that your premium will likely increase significantly if you choose to do this since you’ll pay the entire premium yourself.
  3. Determine if an Affordable Care Act plan is an option for you. You can consider buying an ACA on the federal or state health insurance marketplace. You might also qualify for a subsidy if your income is below a certain level.
  4. Prepare for long-term care. If a catastrophic illness hits you, you’ll want to prevent your retirement and savings from being depleted. Depending on where you live, long-term care policy costs can vary. A long-term care policy can help protect your savings.
  5. Where you live during retirement. The costs of health care will vary depending on where you live during your retirement. Keep in mind that Original Medicare costs will be the same everywhere, but what will be different are the costs related to prescription coverage (Part D), Medicare Advantage plans (Part C), or any supplemental plans and private insurance.

Next Steps

If you are interested in learning more about Medicare plans, we’re right here, ready to help. Please call us at 305.541.5366 to schedule an appointment or learn more about the Medicare plans offered through LEON Health.

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As you prepare for Medicare, you’ll be faced with many important decisions. LEON Health wants to help you select the best options for your needs.

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