How You Can Control Health Care Costs in Retirement?

Chapter 35: How You Can Control Health Care Costs in Retirement?

For most people, the one cost that will definitely go up after — and throughout — retirement is health care. People today stay healthier for longer than ever before, but there will likely come a day when you will face a significant health crisis or illness. According to the U.S Department of Health and Human Services, more than 70 percent of people over the age of 65 can expect to experience a long-term illness sometime in their lives.

The average lifetime cost of health care for a couple retiring today will be approximately a quarter of a million dollars according to studies conducted by HealthView Services, a company that provides health care cost-projection software to the financial services industry and another study done by Fidelity Investments. Adding-in dental and vision care and other out-of-pocket expenses brings the total to approximately $400,000.

While there’s no avoiding the inevitable, there are things you can do to plan for your health care costs after you retire.


The first thing to do is take full advantage of Medicare.

Medicare is a health insurance program for people age 65 and over. It includes:

Medicare Part A

Part A covers hospital care, skilled nursing services, hospice and limited home health care expenses. If you or your spouse has at least ten years of Social Security work history, Medicare Part A is free. If you don’t have that level of work history, it can cost up to approximately $400 per month. Your premium amount is determined by how many Social Security work credits you have in your work history.

Medicare Part B

Part B covers doctor visits, preventive care, physical and occupational therapists, outpatient care and some home health care for a limited period of time when it is medically necessary. The cost of Medicare Part B can range from around $100 to more than $300 per month depending on income.

Medicare Part C

Part C is also known as the Medicare Advantage plan. It provides alternative coverage for retirees offered through medical networks. Premiums range from free to more than $100 per month, depending on the state you live in and the coverage you sign up for. According to the Centers for Medicare & Medicaid Services, the average premium is just over $30 per month.

Medicare Part D

Part D helps pay prescription drug costs. Premiums typically range from $15 to $50 per month. This coverage is available to everyone signed up for Medicare and is supplied by a number of different firms.

Getting started

Retirees must decide whether to go with traditional Medicare (parts A, B and D) or a Medicare Advantage plan (Part C). Medicare Advantage plans have relatively low premiums, but they usually require members to get their care from a limited network of doctors and hospitals. Both options have deductibles and copays which means you will need to be prepared to pay a percentage of your medical bills out-of-pocket.

Two-thirds of Americans choose traditional Medicare, and most of them add a Medigap policy, which covers things Medicare does not. The cost of Medigap policies vary significantly, depending on the provider you select and your gender, age, health, whether you smoke, where you live and other factors.

About a third of Americans select Medicare Advantage plans. Their copays tend to be higher than with traditional Medicare and services are offered through a limited network. Some of the plans include vision, dental and hearing coverage from a select group of providers. These are things not covered by traditional Medicare.

No matter when you decide to retire, you become eligible for Medicare when you turn 65. You must sign up for it the month you were born or during the three months before or after your birth month. If you don’t do so during this seven-month period, you could face a significant, long-term monetary penalty.

Very low income people can qualify for extra help with Medicare premiums and health care costs. You can learn more at the Medicare website.

Medicare is complex. You can get answers to your questions at the Medicare, AARP and Consumer Reports websites.

Long Term Care Coverage

Long term care does not come cheap. According to a study by Genworth Financial, it can range from approximately $45,000 per year for a home health aide to more than $90,000 annually for a stay in a skilled nursing facility.

Medicare offers very limited coverage for long term care. It also generally does not cover most support services like cooking, laundry and cleaning help if you receive care at home. That’s why many people purchase long-term care insurance to cover these expenses.

Long-term care insurance premiums can be expensive, but you will generally pay a lower rate if you sign-up for coverage at a younger age. A good benchmark is your early fifties.

Much like Medicare, long-term care coverage is complex. Work with a reputable provider and make sure you understand what you’re signing up for. Ask questions, read all the fine print and comparison shop to ensure you’re getting the coverage you expect at a sensible price.

Get help handling health care costs

Not sure you can pay health care costs after retirement? Don’t worry. You have options!

Many people decide to work part time after retirement to help cover health care expenses. The good news is that working will not impact your Medicare benefits.

One easy way to work after retirement is to do so online or build an online business. It gives you the freedom to work when and how often you want and you can earn a significant amount to put toward your health care bills. Another important thing to consider: You can generally continue working online through an illness or if you have a limited disability. This is usually not the case with traditional part time jobs.

What are you waiting for? Learn about this great opportunity to work part time from home to pay health care and other retirement-related costs today.


If you liked this article, then you might also like these:

How to get the personal care services you want for less money

10 tax strategies that will help you save more for retirement

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