For Mark Roberts’ Use: Throughout most of our lives, housing is often the biggest expense we face. That often changes in retirement, with healthcare becoming the most expensive monthly item in our budget. A 65-year-old couple retiring this year can expect to spend $285,000 on healthcare over the course of their retirement years. And yes, that is out-of-pocket spending.
That might surprise you, if you were expecting Medicare to pick up the bill for all of your healthcare needs. But in reality, Medicare was designed to pay for hospital care, doctor visits, and some medical tests (like preventive care). You’re also subject to copays and deductibles, just as with any other health insurance plan, and of course you pay a premium for Part B coverage (Part A is free to almost everyone, assuming you paid taxes into the program for at least ten years).
However, standard Medicare does not pay for healthcare expenses such as…
- Dental exams and treatments
- Vision care, glasses, or contact lenses
- Hearing care and hearing aids
- Prescription medications
- Some medical supplies and other necessary items
- Coverage when traveling out of the country
You can purchase a Medicare Part D plan to help with the cost of prescription medications, and some Medicare Advantage plans (which combine Parts A and B) also include Part D coverage. As for the other items listed above, you might be on your own.
While Congress currently considers legislation that would expand Medicare to cover the above expenses, those retiring soon should plan for another way to cover these expenses. Essentially, your options boil down to:
- Enrolling in supplemental coverage (for a premium, of course)
- Self pay (out of your own retirement income)
- Tapping into a health savings account that you used to save money throughout your career (you might be eligible for one of these accounts if you are enrolled in a high-deductible health insurance plan)
Since healthcare can be a considerable expense for many retirees, we urge you to consider this carefully as you plan for retirement. Let’s schedule a meeting to discuss your options, and evaluate them with regard to your expected retirement income.