Healthcare in Retirement: Costs and Tips

It’s crucial to plan for healthcare costs in retirement. So, how much should you expect to spend, and what are your options for coverage?

Before age 65, you may need to use a private plan or COBRA from your job. Or, if you’re married and your spouse will keep working, you might get on your spouse’s plan for a while. There are several options, and we’ll cover them here.

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With private plans from the Marketplace or Exchange, you might be able to reduce costs if you qualify based on income. ACA credits or subsidies can help minimize your premiums, but it’s important to look at the big picture before you pursue those benefits.

Note that if you’re nearing age 65, it’s critical to speak with your health coverage provider and a Medicare representative to make sure you don’t face late enrollment penalties or other problems.

Once you’re on Medicare, you might spend substantially less on healthcare, but it depends on your health and other factors. Medicare isn’t free, and it doesn’t cover everything. Long-term care (LTC), dental, vision, and other services are generally not included with traditional Medicare, so you need to plan for those services. It may be possible to buy additional coverage for prescription medications, and Medigap or Medicare Advantage plans might also make sense—dig into the details with a licensed insurance agent to learn what’s best.

Make a plan for how you’ll pay for healthcare in retirement. The costs can be staggering, but with regular income, you may be able to cover costs year-by-year. Catastrophic events, however, can be problematic. Explore options like health savings accounts (HSAs) if you’re eligible, and investigate how home equity or other resources might help you pay for medical care.

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Justin Pritchard, CFP® is a fee-only fiduciary advisor who can work with clients in Colorado and most other states.

CHAPTERS:
00:00 You’re In Charge After You Retire
00:50 The Landscape in Retirement
01:25 Options Before Age 65
04:14 Costs and Inflation for Private Coverage
05:49 Saving Money With Subsidies (ACA Tax Credits)
7:18 Medicare at 65
9:37 How Much is Healthcare After 65?
12:04 Long-Term Care (LTC)
14:48 Tips for Managing Costs

IMPORTANT:
It's impossible to cover everything you need to know in a video like this. The only thing that's certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. This video is not a substitute for individualized, personal advice. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. ““Likes” should not be considered a positive reflection of the investment advisory services offered by Approach Financial, Inc. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registration.

[stevemlejnek]

I've found COBRA to be an expensive option. It has made me appreciate what the employer has been paying on my behalf. With subsidies, a private plan found on the healthcare marketplace has been quite affordable for me. (I have used this during any gaps in my employment)

[toughfff]

For those not in retirement yet, do all you can to set up your medical before you retire. I work in Adult Protective Services, and everyday I work with seniors struggling with getting the proper medical care.

[lseh]

This is excellent. Thank you for the explanation.

[j.c.]

Thank you. I enjoy your videos. Keep ‘em coming!

[rdgale]

I've heard you spend 80% of your medical expense during the last 20% of your life.

Thank you for putting this video together. It provides a lot of things to think about. I know I'll be coming back to it several times to review what has been said.

[elvdell]

Holy cow, healthcare is what I call a retirement dreams killer.

[lseh]

Please comment on whether a self-employed individual can deduct these health care costs to reduce their income?

[glendacastillo]

I'm glad that even if I'm not rich, I have a TRICARE for life and VA insurance with zero co pay.

[ChrisWilliamsLS]

Do you have experience working with clients who are federal employees, who carry their federal health benefit into retirement, even in tandem with Medicare part B?

[stevecutter]

What about short term care vs long term care policies and costs?

[charleshughes]

When you stop working …it’s your choice !

[straitjacketstudios]

Do ROTH conversions count toward your annual income such that it impacts your healthcare costs? Relative to subsidies?