4 ways to manage health care costs in retirement

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Retirement health care is an expensive item. Experts estimate that a 65-year-old retired couple in 2021 would need about $ 300,000 in after-tax savings for health care costs in their after-work life, even with Medicare, according to Fidelity.

The totals are intimidating, but you can take steps to keep costs as low as possible with good planning, the right insurance choices, and a healthy understanding of your terms and coverage. Try these strategies, now and in retirement, to help control your health care bills.

1. Take advantage of an HSA

A health savings account allows you to set aside pre-tax money for medical expenses. You can invest the funds, and the capital and income are tax-free if you use them for qualifying medical expenses now or in the future. This creates a powerful savings tool.

To use an HSA, you must have a high deductible health plan. If this type of plan makes sense to you, experts recommend saving money on your HSA and leaving it untouched for as long as possible. In 2021, you can save up to $ 3,600 before taxes as a single person or up to $ 7,200 if you have family coverage.

“These accounts are the most tax-efficient plans,” says Sallie Mullins Thompson, chartered accountant and certified financial planner in New York City. “The main thing you need to do is contribute to it religiously whenever you can.”

2. Develop a long-term care plan

A person who is 65 today has about a 70% chance of needing long-term care at some point, according to the Department of Health and Human Services. One of the best ways to approach this problem is to plan it: how long do you intend to stay in your house? Where will you go when you can no longer live there? Who will help you with your financial and health care decisions?

“People don’t like to talk about it because it’s uncomfortable thinking about getting old and the people who care for you,” says Carolyn McClanahan, a certified financial planner in Jacksonville. But planning can help you prepare for changing circumstances.

That could mean purchasing a traditional long-term care insurance policy, which can cost thousands of dollars a year, according to the American Association for Long-Term Care Insurance. Or you could consider a hybrid insurance product that combines permanent life insurance with a long term care rider. (You can use the benefit to pass money on to your heirs or – if you need to – you can use it for long-term care expenses.)

You could be self-insured by setting aside money each year for long-term care expenses. The important thing is to consider your options when you are in your 50s or early 60s, before the products get too expensive.

3. Get the right health insurance plan

Choosing the best health insurance policy once you reach age 65 means finding one that includes your favorite doctors and usual medications, helping you avoid high off-grid and chargeable costs. your pocket. You will also need to determine if you want access to all doctors who accept Medicare – as with an original Medicare plan – or if you want a plan that offers additional benefits but a more limited provider network, such as one Medicare benefit plan.

One way to approach Medicare is to find an agent who can help you compare options. Find someone who is certified to sell as many carriers as possible, which means they will be able to present the full range of choices in your area, says Matt Chancey, a certified financial planner in Tampa.

4. Ask questions

Take an active part in your health care, no matter what stage of your life. When your health care provider orders tests, which can increase your medical costs, make sure you understand why they are being done.

“Tell them, ‘What do you hope to learn from this, and will this change the treatment? ”, Says McClanahan. “It’s important to do this, because often doctors order things by heart. It’s part of their protocol and they don’t stop and think, “Is it really necessary in this case?” “”

The same goes for prescriptions. Ask your doctor if there is anything cheaper you could take, or if there are any changes you could make that could help. “A lot of doctors don’t spend their time talking about lifestyle changes, so they throw pills at people,” says McClanahan. “You can avoid many drugs just by doing the right thing. “

This article was provided to The Associated Press by the NerdWallet personal finance website. Kate Ashford is a writer at NerdWallet. E-mail: [email protected]. Twitter: @kateashford

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RELATED LINKS:

Loyalty: How to plan for rising health care costs.

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Everything Florida seniors need to know to prepare for Medicare enrollment is available at tampabay.com/medicare.

HOW MEDICAL ASSISTANCE WORKS: Here’s what seniors need to know about open enrollment, how Medicare works, and how to find the best coverage for 2022.

COMPARE MEDICINE DIET: The Times put together a table to help Tampa Bay residents buy the best 2022 coverage in Pinellas, Hillsborough, Pasco and Hernando counties.

COMPARE PRESCRIPTION PLANS: This graph shows the plans available in Florida under the Medicare Part D program for prescription drugs.

HOW TO PROTECT YOURSELF FROM COVID-19: While the elderly in Florida are the most widely vaccinated age group in the state, they are still the most at risk from COVID-19. Here are the latest tips for staying safe, why older people need to get the flu shot, and why they should also get the flu shot every year.

SEARCHING FOR PLANS is another good way to compare coverage. It’s a online tool provided by the Centers for Medicare & Medicaid Services to help consumers compare and buy.

FIND HELP: Meet the health insurance needs of the elderly, or SHINE, is a state program that connects seniors online or by phone to help them navigate Medicare benefits. Dial 1-800-963-5337 or visit floridashine.org.


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