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.