Healthcare Planning
Making sure You're covered
The entire process of retirement planning is estimating the income and savings you’ll need to address your future needs and expenses when you’re no longer working. Since the cost of healthcare continues to rise, year after year, it has proven to be one of the largest expenses for retirees.
Healthcare planning comes down to understanding exactly what your healthcare insurance will cover — and how much your premiums will rise over time — plus the cost of potential out-of-pocket expenses your primary insurance will not cover. Estimates of the total cost of healthcare in retirement range anywhere from $250,000 to $500,000 for a married couple.
Keep in mind, most primary healthcare insurance plans, including Medicare, do not cover non-medical custodial care in a nursing home. Should you need custodial care, it can cost as much as $10,000 per month out of pocket if you’re not covered by a Long-Term Care Insurance policy.
The Rising Cost Of The Medicare Part B Premium
The vast majority of retirees are covered by traditional Medicare Part A and Part B. Though Part A is “premium free” for those who qualify for Medicare, participants in traditional Medicare pay a premium for Part B.
In 2022 the Medicare Part B premium increased 14.5 % — from $148.50 in 2021 to $170.10. Although the hike is considered one of the largest premium increases to date, it serves as an example of how much Medicare Part B premiums can rise over a 20-year retirement.
Also keep in mind that, in general, Medicare only covers 80% of your healthcare costs. To cover the remaining 20%, many retirees purchase secondary policies from private carriers known as Medigap insurance.
Research shows a growing number of seniors are choosing a Medicare Advantage plan (Part C) over traditional Medicare (Parts A and B). Medicare Advantage is a private health plan that covers all Medicare benefits plus some additional benefits. However, the coverage in a Medicare Advantage plan can vary from insurer to insurer and from state to state.
Healthcare Planning Is About Making Decisions
There are a number of factors that go into forecasting how much healthcare will cost you over a long retirement — from the quality of your health and expected longevity, to factoring in the rising inflation rate, year after year. Even your income is a factor — traditional Medicare Part B premiums rise when your adjusted gross income exceeds the yearly cap established by the government.
Healthcare planning is about making decisions now to protect you later in life. And there’s no such thing as a one-size-fits-all healthcare plan. At Lewis Tax & Financial Group, we can provide you with the most current information and help you choose the best options based on a comprehensive analysis of your personal healthcare needs.
To learn more, contact us to set up an appointment for a one-on-one meeting, today.