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Healthcare in Retirement: Costs and Tips
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- Опубліковано 17 сер 2024
- It’s crucial to plan for healthcare costs in retirement. So, how much should you expect to spend, and what are your options for coverage?
Before age 65, you may need to use a private plan or COBRA from your job. Or, if you’re married and your spouse will keep working, you might get on your spouse’s plan for a while. There are several options, and we’ll cover them here.
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With private plans from the Marketplace or Exchange, you might be able to reduce costs if you qualify based on income. ACA credits or subsidies can help minimize your premiums, but it’s important to look at the big picture before you pursue those benefits.
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Note that if you’re nearing age 65, it’s critical to speak with your health coverage provider and a Medicare representative to make sure you don’t face late enrollment penalties or other problems.
Once you’re on Medicare, you might spend substantially less on healthcare, but it depends on your health and other factors. Medicare isn’t free, and it doesn’t cover everything. Long-term care (LTC), dental, vision, and other services are generally not included with traditional Medicare, so you need to plan for those services. It may be possible to buy additional coverage for prescription medications, and Medigap or Medicare Advantage plans might also make sense-dig into the details with a licensed insurance agent to learn what’s best.
Make a plan for how you’ll pay for healthcare in retirement. The costs can be staggering, but with regular income, you may be able to cover costs year-by-year. Catastrophic events, however, can be problematic. Explore options like health savings accounts (HSAs) if you’re eligible, and investigate how home equity or other resources might help you pay for medical care.
Resources:
Health care subsidy calculator: www.kff.org/in...
Fidelity cost estimator: communications...
LTC cost estimates:www.genworth.c...
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Justin Pritchard, CFP® is a fee-only fiduciary advisor who can work with clients in Colorado and most other states.
CHAPTERS:
00:00 You’re In Charge After You Retire
00:50 The Landscape in Retirement
01:25 Options Before Age 65
04:14 Costs and Inflation for Private Coverage
05:49 Saving Money With Subsidies (ACA Tax Credits)
7:18 Medicare at 65
9:37 How Much is Healthcare After 65?
12:04 Long-Term Care (LTC)
14:48 Tips for Managing Costs
IMPORTANT:
It's impossible to cover everything you need to know in a video like this. The only thing that's certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. This video is not a substitute for individualized, personal advice. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. ““Likes” should not be considered a positive reflection of the investment advisory services offered by Approach Financial, Inc. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registration.
I've found COBRA to be an expensive option. It has made me appreciate what the employer has been paying on my behalf. With subsidies, a private plan found on the healthcare marketplace has been quite affordable for me. (I have used this during any gaps in my employment)
I plan to retire at age 57, so until I'm eligible for Medicare, I plan to use private healthcare, and hope it remains relatively affordable with subsidies.
Thanks, Steve, it is certainly an eye opener to find out what self-pay insurance costs look like. Good to hear you've got a plan in place.
For those not in retirement yet, do all you can to set up your medical before you retire. I work in Adult Protective Services, and everyday I work with seniors struggling with getting the proper medical care.
What do you mean set up your medical?
Holy cow, healthcare is what I call a retirement dreams killer.
Thank you. I enjoy your videos. Keep ‘em coming!
I've heard you spend 80% of your medical expense during the last 20% of your life.
Thank you for putting this video together. It provides a lot of things to think about. I know I'll be coming back to it several times to review what has been said.
Thanks for watching, and I hadn't heard that before, but it seems reasonable. Let us hope we're fortunate enough to live most of our years without significant medical needs, and deepest sympathies for those with chronic conditions and injuries!
you do if you eat the american diet
80% of healthcare expenses during the last 20% of life …get a plan !
This is excellent. Thank you for the explanation.
Very thorough! Thanks!
Great video, Justin. Thank you.
Glad you enjoyed it!
I'm glad that even if I'm not rich , I have a TRICARE for life and VA insurance with zero co pay.
Please comment on whether a self-employed individual can deduct these health care costs to reduce their income?
That's a great question, and it may be possible to get a deduction. You'd be best served by reviewing the situation with somebody who prepares and files taxes for business owners. That's not something I do, and it can be complicated, so I'd suggest verifying your specifics with somebody smarter than me.
What about short term care vs long term care policies and costs?
For short-term care, I generally think of that as falling under medical coverage and friends/family, and being paid for out of any assets you have (assuming you're fortunate enough to have some/all of those resources-which is unfortunately not the case for many). That's not to say short-term insurance is bad, but I don't see it often and can't claim to have expertise on any specific policies.
Do you have experience working with clients who are federal employees, who carry their federal health benefit into retirement, even in tandem with Medicare part B?
Yes, I've worked with federal retirees who use the health benefit. However, my expertise is not in selecting specific health plans, so you probably wouldn't want to hire me if this is the primary area you want information on. I'm really more of a retirement income and investment person, and I often model health costs using public data and client-supplied details about health conditions. For specifics on your projected costs and options, you might benefit from chatting with a Medicare pro with expertise in FEHB.
@@ApproachFinancial Thank you. I am pretty on top of the cost/benefit options for this but was just checking your experience level in including that information in your forecast or software. I like your perspective on things. I am thinking about retiring in about a year and a half but a number of folks tell me that they would retire now if they had our assets / future income stream. I use two different software that tell us we are in great shape but the problem with software is that it is so dependent upon the input of the proper data with reasonable expectations of future returns. I may reach out in the future. Not sure I trust any of the software although my first degree is in Finance. Thank you.
When you stop working …it’s your choice !
Do ROTH conversions count toward your annual income such that it impacts your healthcare costs? Relative to subsidies?
I believe that they would. Now here's a kicker for some people to think about. You can deduct the full premium amount if you're self employed to reduce your income and get subsidies back when you file taxes.
It is certainly possible for Roth conversions to bump up your income to a point where you cause some problems. So, it could be ideal to do those conversions before or after you need the subsidies (and/or be cautious about which thresholds you hit each year). That said, I could be misunderstanding the question here. There are always details beyond what we can get into here, so anybody reading these comments should triple-check with their CPA or a professional who is familiar with their specifics because this information could be inaccurate, outdated, and/or not relevant to your situation.