The high cost of health care

Plan ahead for health care

Partly due to increased longevity, out-of-pocket health care expenses during retirement are climbing.

A doctor reviewing paperwork at his desk.Finding interim health insurance, before Medicare kicks in, is an increasingly common problem. But it’s just one part of the perplexing and costly later-in-life, health care landscape. Whether you think you’ll retire before age 65 or after, the high cost of health care is something to start thinking about now.

Time to start planning

Realistically estimating what your health care costs will be down the road — and saving for those expenses — can help make you feel more secure about the future. Talk to your financial advisor about planning for future health care costs, and perhaps consider increasing the money you’re setting aside as you get closer to retirement age.


What you’ll spend

Even with Medicare coverage, you’ll have to pay out-of-pocket expenses. At the same time, life spans are lengthening, so you may be paying over a longer period. And with companies continuing to trim retiree benefits, you can no longer count on your employer to share the burden of paying for your health care once you’ve retired.

Two older women exercising with hand weights.

What Medicare covers

For the most part, Medicare fully covers hospitalizations after you meet a deductible. But coverage for doctors’ fees may require a monthly premium, an annual deductible, and a co-payment.

You will also find yourself paying more of the cost of your prescription drugs. In addition, traditional Medicare does not cover dental, hearing or vision — potentially significant expenses. And by and large, nursing home stays and most home health care are also excluded.

Insurance fills the gap

You may want to consider these insurance options.

Secondary or supplemental insurance

Because expenses not covered by traditional Medicare add up quickly, your retirement health care budget should include the cost of premiums for a supplemental insurance policy. This coverage can help pay for Medicare’s deductibles and co-pays.

Medicare Advantage

Medicare Advantage plans are offered by private insurers and usually package traditional Medicare with extra benefits such as dental, vision, and wellness coverage. There may be fewer to choose from as the government cuts back on subsidies for these plans, but they should still be an option. With most Medicare Advantage plans, you pay the regular Medicare premium plus an average of $39 a month extra. That price will vary depending on where you live and what type of coverage you choose.

Long-term-care insurance

Nursing home care is possibly the largest health cost you will face in retirement. Ask your financial advisor about long-term-care insurance, one way to pay these astronomical costs — and still leave some money for your heirs.

Click the Next button to learn about healthcare options if you retire early.