5 Tips For Prioritizing Your Health Care Costs In Retirement

Many retirees are unable to access quality care because they lack financial resources. If they ever do so, health care spending eats up a significant portion of their savings. Medical expenses can easily eclipse all their other expenses combined, which is probably not something they considered when thinking about their retirement plan.

While you’re younger, you can take your future into your own hands. Prepare, budget, and make wiser financial decisions so you save for upcoming rainy days and enjoy your golden years. Follow these tips to help minimize your health care expenses now or when you retire.

Understand Your Medicare Coverage

A good starting point is understanding what benefits Medicare covers and finding ways to access what isn’t covered. Medicare Part A pays for hospital services, Part B for medical services and Part D for medications.

Part A is free for eligible people who have paid enough Social Security taxes while working. If you don’t have Part B and Part D, make sure to enroll three months before you turn 65. You want to make sure you have a financial buffer for every type of health care expense, from inpatient stays, preventive services and outpatient care all the way to medications.

Check For Dual Eligibility

People 65 and older with active Medicare coverage may also qualify for Medicaid. These individuals are called dual eligibles. Medicaid is a joint state and federal program managed entirely by the state, so requirements for eligibility vary.

If you qualify, it can pay for benefits that Medicare can’t, like personal care and nursing home care services. Medicaid also provides cost-sharing assistance, so instead of paying for copays, deductibles and coinsurance, the state will pay it on your behalf. If you’re eligible for both, you’re automatically enrolled in a Medicare Savings Program, which pays for your Part B premium.

Reduce Medication Cost

Only 62% of adults are somewhat confident in their ability to afford health care, including medications. Medicare Part D makes prescriptions more affordable for retirees but still incurs out-of-pocket costs — especially for specialty drugs. Specialty medications that treat chronic diseases like cancer and rheumatoid arthritis are expensive.

Fortunately, many organizations offer assistance to make specialty prescriptions accessible. Companies like AbbVie Patient Assistance Foundation and Pfizer RxPathways have patient assistance programs to help you get your necessary specialty medication.

Supplement Coverage With Medigap

If you don’t qualify for the cost-sharing benefits of Medicaid since you have a higher income, private insurance companies sell Medigap plans to assist Medicare members with out-of-pocket expenses, such as copays, coinsurance and deductibles for all parts of Medicare. It also pays for up to $50,000 emergency medical care outside of the U.S., which Original Medicare doesn’t cover. If you have travel plans, add Medigap to your existing coverage.

Get Long-Term Care Insurance

Most seniors prefer to age in place, but those with medical conditions may require in-home care services for months to stay independent. For example, an older person with limited mobility may need a caregiver to assist them in completing house chores.

Long-term care insurance helps pay for care needs in a facility, often spanning several months. These services include respite, hospice, skilled nursing, therapy, personal care and stays in nursing homes.

Relocate To An Affordable State

Moving to another place can be your last option to help you stretch your dollars and afford health care during retirement. You can put the extra savings from rent, utilities and groceries toward paying medical bills.

South Dakota, Louisiana, West Virginia, Florida and Wyoming residents pay $9,620 to $11,736 per year for health care. You might also consider moving to Michigan, Washington, Nevada, New Mexico and Hawaii, where yearly health care premiums are more retirement-friendly. Before you change your residence, check other cost-of-living factors, such as rent and the price of a home.

Insurance Can Help You Afford Health Care During Retirement

Out-of-pocket health care cost is one of the most significant expenses during retirement. It takes away a considerable portion of the savings you build up over the years. Fortunately, you can drive down care costs and pay the cheapest out-of-pocket expense by having insurance.

Sign up for Medicare or Medicaid, and supplement your protection through Medigap and long-term care insurance. Lastly, you can move to states with a more affordable cost of living so you can maximize every dollar for health care.

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