If you’re approaching retirement, you’re probably assuming that most of your health care costs will be covered by Medicare. To a certain extent, that assumption is correct. The combinations of Medicare parts A and B cover a large portion of hospitalizations and trips to the doctor’s office. Part D covers a substantial share of prescription drug costs.
However, there are still a number of health care expenses that aren’t traditionally covered by Medicare. For instance, Fidelity recently found that the average 65-year-old couple will spend nearly $245,000 on out-of-pocket health care costs in retirement.1 That figure includes expenses like premiums, deductibles, copays and more.
While Medicare will likely play an important role in funding your health care in retirement, it won’t cover everything. It’s important that you have a funding plan to pay for those costs not covered by Medicare. You may look at supplemental policies, a well-funded health savings account (HSA) or even a retirement income plan that provides for medical expenses.
Below are three common expenses that aren’t covered by Medicare. If you don’t have a plan to pay for these costs, now may be the time to develop one.
Vision, Dental and Hearing
You may be used to having vision, dental and hearing coverage through your employer plan. Unfortunately, these costs usually aren’t covered by Medicare. The exception is when you have vision or hearing issues related to serious medical problems. For instance, Medicare may cover treatment for cataracts or a hearing aid related to severe hearing loss. However, outside of those instances, don’t expect a routine vision check or dental cleaning to be covered by Medicare.
One possible strategy is to consider a Medicare Advantage policy. These policies, also referred to as Medicare Part C, are Medicare alternatives offered through private insurers. They often bundle traditional Medicare coverage with supplemental protection for vision and hearing.
Do you plan on spending significant time overseas in retirement? Will you travel around the world or even live part of the year in another country? If so, you may want to find a backup health care coverage plan to supplement Medicare.
In most cases, Medicare doesn’t cover health care costs for treatment provided outside the United States. If you plan on spending substantial time overseas, you may want to evaluate your destination’s health care system. The country may offer government-backed care, or you may need to buy a supplemental insurance policy.
According to the U.S. Department of Health and Human Services, the average 65-year-old has a 70 percent chance of needing long-term care at some point in their lifetime.2 As you might imagine, that care can be costly.
Unfortunately, it also isn’t usually covered by Medicare, except for in a few specific instances. If the care is needed as part of a rehabilitation plan associated with a hospital stay, then Medicare may cover some of the cost on a partial and temporary basis. However, it’s not a permanent solution.
Consider how you might cover those costs if you need assistance for months or even years. You could fund your HSA, purchase long-term care insurance or even ask your children and other loved ones for help.
Unsure of how you’ll pay for these expenses in retirement? Let’s talk about it. Contact us at Gregory Financial. We welcome the opportunity to discuss your needs with you and develop a strategy. Let’s connect soon and start the conversation.
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