Hyden, Miron & Foster, PLLC Law Blog

Sunday, January 28, 2018

Planning for Healthcare Costs in Retirement

How much should I anticipate spending on healthcare during retirement?

Healthcare costs are rising annually and much uncertainty exists around the future of the Affordable Care Act.  When you are planning for retirement, it is crucial that you take into account your potential medical costs.  Medicare will cover some costs for those eligible, but you will need to pay for some Medicare services, supplemental insurance, and out of pocket costs.  Our Arkansas retirement attorneys discuss how you can effectively plan for your healthcare costs in retirement below.

Healthcare Expenses Are Often Overlooked

Many individuals approaching retirement age fail to consider the costs of healthcare expenses when they retire.  Most working Americans receive health insurance coverage through their workplace, making it easy to forget just how expensive insurance can be when you are no longer gainfully employed.  Further, it can be difficult to ascertain exactly what government assistance you may receive when you attain the age of 65.

In general, people over the age of 65 will be automatically entitled to receive Medicare Part A if they are already collecting retirement benefits from the Social Security Administration.  Medicare Part A will cover inpatient hospital care, some home health services, nursing home and hospice care.  There are numerous limitations to Medicare Part A coverage and seniors should always anticipate needing to pay for some hospital or nursing home bills.

When planning for retirement, you must ensure you have enough money to cover the premiums for Medicare Part B.  Medicare Part B premiums increase as your income goes up.  You will also want to research Medigap coverage and prescription drug coverage, which will cover services not otherwise included in Medicare premiums.  

There are several online healthcare cost calculators that can help you to estimate how much money you will need to save to retire.  In general, you should budget at least $375 a month for premiums and out of pocket healthcare costs.  Couples should double this figure.  Healthcare costs are additionally expected to increase at double the rate of inflation, meaning that in 10 years, your monthly figure could be twice as much.  The most important thing you can do now is to start setting aside money for retirement.  Contact a retirement planning attorney to find out more about the many retirement plans you may be eligible for to help you save.

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