Health Insurance and Medicare

The cost of medical coverage, both before and during retirement, is substantial. You can discuss this with your Wealth Alliance Advisor, to help ensure that you are adequately planning for the cost of medical care.

HEALTHCARE COSTS IN RETIREMENT

Tip: Medicare beneficiaries spent an average of $4,734 out of pocket on health care in 2010, the most recent year for which figures are available. Forty-two percent of that went to premiums, 20% to long-term care facilities.
Source: MedicareResources.org, November 23, 2016

American workers are split about 50/50 when asked if they are confident they will have enough money to pay for medical expenses in retirement.

In a 2016 survey, 45% of all workers reported they were “not too” or “not at all” confident they would have enough money to pay for their medical expenses in retirement. Fifty-four percent said they were “very” or “somewhat” confident they could pay the cost.¹

Regardless of whether you’re confident or not, it’s important to have an idea about how much healthcare may cost in retirement. By putting the costs in better perspective, you might be able to better understand what you can pay for and what you can’t.

Health-Care Breakdown

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A retired household faces three types of health-care expenses.

  1. A household may have the expense of premiums for Medicare Part B (which covers physician and outpatient services) and Part D (which covers drug-related expenses). Typically, Part B and Part D are taken out of a person’s Social Security check before it is mailed, so the premium cost is often overlooked by retirement-minded individuals.
  2. The household should expect to pay for co-payments related to Medicare-covered services that are not paid by Medigap or other health insurance.
  3. The retired household should expect to pay for dental care, eyeglasses, and hearing aids, which are typically not covered by Medicare or other insurance programs.

It All Adds Up

Fast Fact: Nursing Home Costs. In 2016, the national average rate for a private room in a nursing home was $92,376 a year. The national average rate for a semi-private room in a nursing home was $82,128.
Source: Genworth 2017 Cost of Care Survey

According to a HealthView Services study using more than 50 million actual cases, a healthy married couple, age 65, can expect healthcare premiums to add up to $288,400 over their lifetime. If you include dental, vision, co-pays, and out-of-pocket costs, the total rises to $377,412.²

For a healthy 55-year-old couple who plans to retire in a decade, the number jumps to $466,000. ³

Should you expect to pay this amount? Possibly. Seeing the results of one study may help you make some critical decisions when creating a strategy for retirement. Without a solid approach, health-care expenses may add up quickly and alter your retirement spending.

Out-of-Pocket Healthcare Cost

The cost of healthcare for a 65-year-old couple is projected to increase with age.

  Age 65 Age 85
Annual cost $7,725 $28,644
Monthly cost   $644 $2,387

Source:  HealthView Services: 2016 Retirement Health Care Costs Data Report (Costs shown are in future dollars.)

Prepared for the Future?

Workers were asked how much they have saved and invested for retirement — excluding their residence and defined benefit plans.

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Employee Benefit Research Institute, 2016 Retirement Confidence Survey.

1. Employee Benefit Research Institute, 2016 Retirement Confidence Survey
2,3. HealthView Services: 2016 Retirement Health Care Costs Data Report (Costs shown are in current dollars.)

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2017 FMG Suite.

THE ANATOMY OF A SUPPLEMENTAL HEALTH PLAN

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Understanding the Basics of Medigap Policies

Medicare coverage can be a critical component for living a healthy life in retirement, as well as for maintaining your financial independence during these years. Yet, as important as it is, Medicare does not cover the full range of healthcare expenses you may experience in your golden years.

To fill the holes that exist in Medicare, Medigap insurance can be purchased by individuals over 65 to supplement Medicare.

A Medigap policy is designed to cover expenses such as copayments, coinsurance and even deductibles—the so-called gaps in Medicare. Coinsurance is only covered after you have paid the deductible, unless you select a Medigap policy that also covers the deductible.

From A to N

Medigap is private health insurance that must follow federal and state laws designed to protect you. In most states, you can only purchase standardized coverage packages, or Plans, each of which is identified by the letters A through N.

These standardized packages must offer the same basic benefits regardless of which insurance company is offering it. Cost is usually the only difference between Medigap policies with the same letter.

All insurance companies are required to offer the Plan A standardized package. Each Medigap plan option (A-N) will differ on the benefits offered and the percentage of coverage for these Medicare gaps.

To get a better understanding of what each of these plans offers, go to www.medicare.gov and click on the “Supplements & Other Insurance” tab at the top of the page. Then click on “How to Compare Medigap Policies.”

An Early Start at 65

You must have Medicare Parts A and B to buy a Medigap policy, and the best time to buy Medigap insurance is within the first six months you are both 65 or older and enrolled in Medicare Part B. By doing this you will not need to undergo a medical underwriting. For those with existing health conditions, this enables them to buy a policy at the same price that is charged for people in good health.

A separate Medigap policy must be purchased for each spouse.

If you are nearing retirement, or have already discovered that these Medicare gaps can be expensive, it may be time to determine if a Medigap policy is right for you.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2017 FMG Suite.