How to Lower Health Care Costs in Retirement—The 4 Best Ways
Did you know that a recent Fidelity study shows that the average couple can expect to spend $260,000 on health care expenses in retirement? Well, unfortunately, that is the current figure circling around the retirement blogosphere. And that isn’t even taking into account the possibility of long term care such as an extended nursing home stay, a consideration which escalates the estimation well into the three hundred thousands.
It can’t be true, can it?
I know, when I saw that figure in print for the first time, I was surprised as well. But as I begin adding up all of the possible costs—really crunching the numbers—I found out it was a lot more probable than I originally thought.
So what are you to do? If you are still working, the answer is common sense: save more to cover the costs. But if you are beginning the retirement transition right now, it’s too late for that strategy. You need something to lessen the burden—and fast!
Although these four ways won’t slash that number in half by any means, they can certainly help keep your health care costs in check:
1. Sign Up For Medicare On Time To Avoid Penalties
You must sign up during the six-month period surrounding your 65th birthday or else pay hefty penalties that continue for your entire life! Unless you have a qualifying reason, everyone should sign up for Medicare parts A and B. And unless you are on an Advantage plan with a drug plan rolled into the deal, you should sign up for Part D. Because, if you miss it by just one year, you will accrue $4,248 worth of penalties over your lifetime, assuming you live 20 years after 65.
2. Take Advantage of the Preventive Services Provided by Medicare
Like the old saying goes, an ounce of prevention is worth a pound of cure, and Medicare agrees. While Medicare covers very few things in full, the program covers every penny of many preventive services including (but not limited to) the following:
- Flu Shots
- Various cancer screenings
- Obesity screenings and counseling
- Annual “wellness” visits
- Tobacco use cessation counseling
Now I am not saying you should spend all of your golden years sitting in cold waiting rooms. Rather, the core of this advice is simple: take care of yourself. Take the tiny steps now, so you can avoid the big health issues later. Catch the problems in their inception, so what could have been a free office visit and quick fix doesn’t end up costing you an arm and a leg in hospital bills.
According to a study conducted by Age Wave, pre-retirees and retirees say the two most important ingredients to a happy retirement are health (81% of respondents) and financial security (58% of respondents). The funny thing is that taking preventive measures often helps both.
3. Cut Prescription Drug Costs
It is not difficult to see that the cost of drugs, especially for those with chronic illness, contributes its fair share to that $260,000 figure in health care expenses. Sure, you have a Part D Drug Plan, but there are still expensive coverage gaps.
But the good news is there are a few things you can do to lessen the burden. You can switch to generics. You can try mail order. Some people are even splitting pills to split the bill with certain medications.
For more specific details to help you cut drug costs, read this: “How to afford meds in the donut hole”.
4. Beat the Medicare Supplement Creep by Shopping Around!
If you don’t have a Medicare Supplement, I would strongly recommend getting one. And if you do and you’ve been in the same one for 3-5 years, I strongly recommend that you shop around.
Because Medicare Supplement premiums naturally creep up year-by-year, and they rarely come back down. The best news is you don’t even have to change coverage when you switch. Because of standardization, any and all of Medicare’s 11 lettered plans (A-N) offer the same exact benefits no matter which company you purchase it from. It is not uncommon for people to save $40-50 per month by switching. I’ve even seen savings as high as $100 per month or more.
The point is it pays to bargain shop! And it will pay to put some or all of these health care cost cutting ideas to the test.
Want to check and see what you could save by switching? Use our free Medicare Supplement quoting tool. No contact information required. Or call our office and we can give you a free quote over the phone! 937-492-8800