Anticipating Health Care Costs In Retirement
Many of us eagerly look forward to retirement as a time when we can slow down and spend time doing the things that truly matter to us. For some, that means traveling, while for others retirement means having more time to spend with family and friends, or to indulge in our favorite hobbies and interests. Whatever your definition of retirement is, it is important to begin planning now for expenses that are sure to come up. Planning for health care costs during retirement is an important part of making sure your assets and your future are secure. No matter what your current age, it is never too early or too late to take a good, realistic look at the kind of costs you may end up paying, and exactly how you will go about meeting these obligations.
Medicare Costs and What It Will Cover
According to a December 2015 report about retirement planning on CNN, meeting the health care costs that are certain to come up during retirement is a major concern for Americans of all ages. The report states that a 65-year-old couple can anticipate spending roughly $266,000 during the years of their retirement on Medicare costs alone. While the majority of people will not pay a premium for Medicare Part A, which covers hospital costs, paying supplemental Medicare costs could take a big bite out of your monthly budget. These costs include:
- Medicare Part B, which pays for doctor services and outpatient care;
- Medicare Part D, which covers prescription drugs; and
- Supplemental coverages, which cover deductibles and co pays.
While premiums for Medicare part B coverage are generally tied to inflation, other Medicare costs may be set by your provider and can increase depending upon the type of plan you have and where you reside. In addition, there are still health care costs that are likely to come up in retirement for which Medicare does not provide, such as long term or nursing home care, dental expenses, and vision costs.
Healthcare Savings Plans
According to the CNN report, healthcare costs are least expensive during the first year of retirement, but continue to increase as you age. This is due both to the fact that as you get older you will generally require more medical care and treatments, and that each year throughout your retirement the costs associated with healthcare are likely to increase. One way of anticipating these extra expenses is by establishing a Health Savings Account. According to the Internal Revenue Service, Health Savings Accounts were established in 2003 to help individuals with high deductible health insurance plans save money for medical expenses not covered by their plan. Contributions to your Health Savings Plan are non-taxable and not included as income provided you spend the money on healthcare costs. To get an estimate of how much you may need to save to meet healthcare costs during your retirement, the American Association of Retired People (AARP) offers a health care costs calculator, which you can use to factor any current medical conditions you may have as well as lifestyle factors which could influence your future health and medical costs.
Contact Our Experienced Medicaid and Estate Planning Attorneys
At Cavallo & Cavallo, our experienced New York Medicaid, and estate planning attorneys know that it is never too early or too late to begin planning for your future. We help clients plan for the type of lifestyle they want during retirement, while ensuring that both your interests and assets are protected. With offices in the Bronx and Westchester, we are your neighborhood law firm, providing efficient, effective legal representation to handle all your legal needs. Contact us today for a free consultation.