After retiring, you could notice that several of your costs begin to drop. Without a daily work commute, your transportation expenses might decrease. Additionally, once your house is fully paid for prior to when you retire, your housing expenditures may go down as well.
However, when it comes to expenses that typically rise during retirement, healthcare stands out. As we age, we often face more health problems, and you might discover that your out-of-pocket expenses after enrolling in Medicare can be significantly higher than what you had expected.
Read More: Earn up to $845 cash back this year just by changing how you pay at Costco!
Learn more here.
Fidelity recently provided an estimation of the potential healthcare expenses for a typical 65-year-old retiree nowadays. This figure surprisingly amounts to approximately $165,000.
Additionally, it’s important to remember that this estimation doesn’t include the expenses related to long-term care. These costs can be extremely high because Medicare typically does not cover them.
The positive aspect, however, is that with the correct approach
Medicare
Actions you take might reduce your healthcare expenses during retirement. Consider these three moves worthwhile.
1. Sign up on time
Your initial Medicare enrollment period spans seven months, beginning three months before the month of your 65th birthday and ending three months after that month. If you don’t enroll then, you’ll have an opportunity to do so during Medicare’s general enrollment period, which runs from Jan. 1 through March 31 each year. But if you miss your initial enrollment period, you could get stuck with surcharges on your Medicare Part B premiums.
Specifically, you’ll pay an extra 10% for Part B for life per 12-month period you were eligible for coverage but didn’t sign up. You’re also at risk of surcharges for Part D if you go too long without prescription drug coverage.
When your 65th birthday approaches, make sure to allocate some time to enroll in Medicare unless you qualify for a special enrollment period. You may be eligible for this special window if you have coverage under an appropriate group health plan with 20 or more members during your initial enrollment phase.
2. Join the annual open enrollment process each year
Every year, Medicare has an open enrollment period that starts on October 15th and concludes on December 7th. Within this timeframe, you have the opportunity to change your Part D plans for improved prescription drug coverage or make a transition between different plans.
Medicare Advantage
You have the option to switch plans until you find one that suits your needs. Alternatively, if none of them meet your satisfaction, you could abandon Medicare Advantage altogether and transition to traditional Medicare (comprising Parts A and B along with a separate Part D prescription drug plan).
Certain individuals choose not to participate in open enrollment as they find the task of comparing various plan options too daunting. It’s understandable, considering the complexity involved.
can
be daunting.
However, if you skip open enrollment, you might find yourself facing increased expenses for coverage — whether through elevated monthly premiums or greater out-of-pocket payments. This situation isn’t desirable under any circumstances. Therefore, before deciding that navigating the comparison of various plans is too complex, try using Medicare’s plan finder tool to streamline your selection process. By inputting details relevant to you, such as medications you use regularly, this tool will help pinpoint the range of options accessible in your region alongside their associated fees.
3. Obtain additional insurance for coverage.
You won’t qualify for a
Medigap plan
If you join Medicare Advantage, this might not be necessary. However, if you opt for Original Medicare, purchasing supplementary coverage, also known as Medigap, at an earlier stage could prove quite beneficial.
A Medigap policy might assist in covering the expenses related to deductibles and coinsurance associated with your medical treatment. To illustrate, imagine you require a 65-day hospitalization within a year. You would be responsible for paying $1,632 for the initial 60 days, followed by $408 each day for the last five days. However, with Medigap coverage, you might not bear these costs entirely.
Spending $165,000 on healthcare during retirement might appear daunting. However, with careful management of your Medicare enrollment, active participation in annual open enrollments, and obtaining Medigap coverage, you could discover that these expenses are quite bearable.
The $
22,924
The Social Security benefit many seniors fail to notice.
If you’re similar to many Americans, you might be lagging several years—or even more—behind on your retirement savings. However, some lesser-known “ Social Security tips” may assist in increasing your retirement earnings. For instance: one simple strategy could provide an additional $
22,924
More every year! After mastering strategies to optimize your Social Security benefits, we believe you can retired assuredly, enjoying the sense of security we all seek.
Just click here to find out how you can learn more about these techniques.
Check out the “Social Security secrets” »
The Motley Fool has a
disclosure policy
.
