4th Quarter 2017

Preparing For Retiree Health-Care Expenses

Health-Care ExpensesWhen planning for retirement, people too often fail to confront the reality of health-care costs. Even after you turn age 65 and can sign up for Medicare, you’ll still have plenty of other expenses, including Medicare premiums and out-of-pocket costs or coverage to fill in the gaps. It’s important to factor these costs into retirement planning.

Use the Retiree Health Care Cost calculator ( to estimate how much money you may need to pay for medical expenses, prescription drugs, and health insurance premiums in retirement. Start planning early, and include these costs in your retirement-savings calculations.

Sign up for Medicare at the right time. You generally need to apply at age 65. You have three months before your birthday month and up to three months afterwards to enroll. You can enroll at or visit your local Social Security office. You may be able to delay signing up if you are still working at 65 and have health insurance through your current employer, but then you must enroll within eight months of leaving your job and losing your employer’s coverage.

Decide how to fill the gaps. Medicare leaves you to pay deductibles and co-payments, and it doesn’t automatically cover prescription drugs. But there are ways to fill in the gaps. You may have retiree health insurance, or you could get a Medicare supplement policy. Such policies cover most of your out-of-pocket medical expenses. You may also need a Part D prescription drug policy to cover prescription drugs. Or you can get a Medicare Advantage plan that covers both health-care and drugs, but usually with a limited network of doctors and hospitals. Find out more about your options at, or call your state health insurance assistance program (find local contact information at or 800-Medicare).

Reassess your options every year. You have from Oct. 15 to Dec. 7 every year to pick a Part D or Medicare Advantage plan. Even if you’ve been happy with your current coverage, go to the Medicare Plan Finder ( to assess your options. Look at the premiums as well as the out-of-pocket costs for the drugs you take — the plan with the lowest premiums may not be the least expensive by the end of the year if it charges a lot for your drugs. Also see if you can save money by using a preferred pharmacy. If you’re comparing Medicare Advantage plans, look at coverage for your drugs as well as whether the doctors and hospitals you want to use are covered. Find out what happens if you go out of network — some plans just charge higher co-payments if you use providers that aren’t in the plan’s network, but others don’t provide any out-of-network coverage except for emergencies.

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