Each year Fidelity Investments does an analysis of the expected cost of health care in retirement.
Good news—it hasn’t gone up. Bad news –it is still a staggering number.
Couples retiring in 2014 can expect to pay $220,000 in health care costs on average during their retirement years. But as in so many things, it just depends on how healthy you stay and what Medicare coverage you have.
As for the good news of health care costs moderating, Fidelity says it is because:
Long-term care prescription drug saving due to the Part D donut hole shrinking and covering some of the costs that the retiree used to pay out of pocket.
An increasingly cautious and selective health care consumer. In other words asking more questions, shopping and comparing and delaying some selective surgeries.
Shopping and comparing Medicare insurance plans is one important way to keep costs in check in retirement. Recently at Longevity Alliance we saved a customer more than $2000 by showing them the options in the new state they were moving to and seeing that they could get the same coverage at a lower price from a different company.
That's being a smart consumer!One of the most important things retirees can do is understand how their coverage works and shop and compare for plans that fit their needs and preferences.
For example, some people like the full coverage of a Medicare Supplement plan so they are willing to pay a higher fee every month to that they have coverage when they need it and they budget a set amount each month for healthcare whether they use it or not. Others select a Medicare Advantage plan where you pay deductibles and co pays as you use the health care system. The monthly fee is less, but you’ll pay something every time you see a doctor, or go to the hospital or have tests done. And yet others choose to go it alone with just Medicare Part A (hospital coverage) and Medicare Part B (physicians) and pay the 20% of the bill Medicare doesn’t cover.
When it comes to Prescription Drug coverage remember that if you don’t sign up when you are first eligible, then you will pay a penalty when you do join and you will pay that throughout your retirement years.
So having the right type of Medicare plan for your health care situation makes a big difference in how much you will be paying for health care in retirement. That’s also why it is important to understand what kind of Medicare plan is a good match for you and to understand that as you age and your healthcare needs change, the type of plan may need to change as well.
Planning for retiree health care is important. Checking your plan each year is essential if you are going to keep your health care costs from taking too big a chunk out of your budget.