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What you do not know about Medicare in retirement can cost you

As with any purchase, it is good to know what you are buying, before you do. Before purchasing, you should ask yourself what the product does and can do for you. Medicare is one of those things.

Did you know that an average couple could spend at least $280,000 on retirement health care. Did you also know that only approximately half of Medicare qualified beneficiaries have a financial plan in place. Many seniors find themselves unprepared for the costs of Medicare in their retirement. That is not a place you would want to be. Medicare costs can add up when you are responsible for co-insurance, premiums, deductibles and co-payments.

However, the list of out-of-pocket expenses does not end there. You will also need to shell out money for dental care, supplemental health insurance (Medigap), hearing tests, the cost of prescriptions and vision care. This sudden change in what you are responsible for if you have always had health insurance through an employer is quite drastic for many. In fact, studies have shown that over 33 percent of American adults are more concerned about paying for health care in retirement than in paying off debts or paying for lifestyle expenses. Of that number, only about half have a future financial plan in place and many do not realize all the extra expenses they are going to bear.

While there is a large number of Americans about to become Medicare beneficiaries that take the time to do some research before retirement, there are an equal number of looming newbies that are not certain where to look, what to look for, how to save, what is best for their needs, when the benefits start, when to enroll and a whole host of other critical information required to understand how Medicare (and Medigap) work. Research may help, but due to the complexity of the system, how rapidly it is changing right now and in the future, it is best to discuss your needs with a highly trained insurance agent.

What can an about-to-be Medicare beneficiary do to save for the inevitable future health care expenses? Most financial experts suggest a health saving account, available via a high deductible health plan. Why a health savings account? They are a tax-free investment accounts — all contributions are made pre-tax, and any earnings or interest accrued is tax-free. If you take money out for necessary medical expenses, then that is also tax-free.

There are always alternatives to be found to suit your budget and lifestyle. It just takes time, and patience and research in advance of your enrollment date to have it all make sense.

Medicare does not pay for all medical expenses

If you are close to your 65th birthday, then you may be wondering about Medicare and how it works. It is a good time to begin to figure out what you want and should need from your healthcare coverage. On average roughly 10,000 baby boomers turn 65 every day.

The two most important things you need to know about Medicare are: Medicare does not cover everything, so plan for extra expenses, and if you do not sign up when first eligible (and are without qualifying coverage elsewhere), you pay a life-long penalty for late enrollment.

Many people think that Medicare is free. This belief likely comes from the assumption that since they paid into Medicare while working, thanks to the employer withholding a sum of their earnings, Medicare is free. However, that is not true. Medicare has deductibles, premiums, co-pays and other assorted expenses.

The second reason, that may contribute to the belief that Medicare is free probably emerged from the trending talk about “Medicare for All.” Many assume that “Medicare for All” means that it is or will be free. That is not true. The slogan, “Medicare for All” is a call for Medicare to be open and available to all.

Currently Congress is sorting through various bills that hope to achieve a Medicare system with no co-pays, premiums or deductions. In the meantime, you need to know that the existing Medicare programs cost you money the instant you enroll. So, it is best to be prepared in advance, spend time doing cost comparisons, know what you want and need, make a list and ask questions before agreeing to buy Medicare. Moreover, remember that long-term care (if required), dental, over-the-counter medications and basic vision care are also extra expenses you need to cover as well.

If you have worked for ten years or more, you do not pay premiums for Medicare Part A, but it does have a deductible of $1,364 per benefit period and some caps on benefits. Ask your insurance agent to explain that to you in detail so you are familiar with what is and what is not covered. Part B has a standard monthly premium of $135.50 right now and comes with a $185 deductible for 2019. While Part B does not cover medications, Part D covers medications. You can also use a stand-alone plan in original Medicare or you could opt for Advantage Plan Part C to help you cover the costs of medications.

Planning for and determining you healthcare coverage in retirement is all about research. Knowledgeable and experienced insurance agents are great assets in helping seniors determine what is best for their budget and needs.