{"id":2833,"date":"2018-07-26T18:52:35","date_gmt":"2018-07-26T22:52:35","guid":{"rendered":"https:\/\/www.singlecare.com\/blog\/?p=2833"},"modified":"2024-02-02T09:23:07","modified_gmt":"2024-02-02T14:23:07","slug":"are-you-prepared-for-health-care-costs-in-retirement","status":"publish","type":"post","link":"https:\/\/www.singlecare.com\/blog\/are-you-prepared-for-health-care-costs-in-retirement\/","title":{"rendered":"Are you prepared for healthcare costs in retirement?"},"content":{"rendered":"

Healthcare costs in retirement are a tricky thing to budget for. You\u2019ll have to get health insurance in retirement, plus plan for out-of-pocket expenses and prepare for an increase in costs if you need to go to an assisted living facility.\u00a0<\/span><\/p>\n

If you started saving for retirement when you were young, that\u2019s great! But even if you didn\u2019t, there\u2019s still a path to comfortable living alongside the medical expenses everyone can expect after they hit age 65.<\/span><\/p>\n

How to plan for healthcare costs in retirement<\/span><\/h2>\n

Healthcare costs in retirement will likely be expensive. <\/span>According to the Fidelity Retiree Health Care Cost Estimate<\/span><\/a>, the average retired couple who are 65 in 2023 will need to have $315,000 saved toward out-of-pocket health care costs throughout their retirement, assuming both are enrolled in traditional Medicare. That estimate excludes over-the-counter medications, dental services, or long-term care. If you have Medicaid or excellent retiree healthcare coverage or remain in excellent health throughout your life, you might not need to pay this much out of pocket.<\/span><\/p>\n

Long-term care, whether in an assisted living or at home, is an extra expense that Medicare doesn\u2019t cover, and you should expect to budget about $200 per day, says Richard Stefanacci, DO, an internist and geriatrician who teaches a class about population health at Thomas Jefferson University.<\/span><\/p>\n

Those are just averages, though. The cost of healthcare in retirement will vary significantly based on each individual. <\/span>Jennifer Steil<\/span><\/a>, a wealth management adviser in The Woodlands, Texas, notes, “A good rule of thumb is to have anywhere between 80% to 85% of your annual pre-retirement income for your annual retirement budget.\u201d This includes all costs in retirement, including food, housing, vacations, and more. Additionally, you should be prepared for about two decades of healthcare costs. Stefanacci says to budget on the conservative end and have more money saved than you think you\u2019ll need.<\/span><\/p>\n

Retiree health insurance coverage\u00a0<\/span><\/h2>\n

One of the most important things to know about health insurance after retirement, or your health retirement insurance options, is that it doesn\u2019t necessarily work the same way your health insurance did while you were in the working world. Your employer-sponsored plan may have included lower copayments and deductibles; plus, you were still getting a paycheck. For Medicare, those copayments and deductibles change depending on how you receive your Medicare coverage and whether you\u2019re enrolled in or qualify for other programs, benefits, and insurance. But keep in mind that Medicare is not the only option for healthcare once you\u2019re retired.<\/span><\/p>\n

Medicare and Medigap<\/span><\/h3>\n

When you turn 65, you should apply for Medicare if you aren\u2019t already receiving Social Security benefits. (Some people must apply with the Railroad Retirement Board instead.) You\u2019ll have <\/span>four parts within Medicare to choose from<\/span><\/a>, plus optional supplemental health coverage called Medigaps if enrolled in Original Medicare. If you or your spouse are still working or getting insurance from your job, you may not want to take Parts B or D yet. Traditionally, Medicare Part B will cover approximately 80% of medical costs, says Cobi Blumenfeld Gantz, co-founder of <\/span>Chapter<\/span><\/a>, a free online website that helps seniors navigate the Medicare sign-up process. If you have Original Medicare, the remaining 20% is usually paid out-of-pocket or with a Medigap plan. These are the four parts Medicare.gov lays out:<\/span><\/p>\n