Wednesday, January 22, 2014

Preparing for High Health Care Costs After Retirement

Preparing for retirement can be difficult. Rising healthcare costs don’t make it any easier. This is especially true for older people who need to see a doctor, dentist or ophthalmologist more often than other younger people. Anyone who wants to retire will need to prepare for them.

What Changes Are Retirees Facing?

The landscape of the healthcare industry has changed significantly over the last decade. Here are some reasons healthcare costs are becoming more burdensome to people after retirement:

· Fewer employers are offering healthcare plans to retirees. The percentage has shrunk from 66% to 33% since the early 90s.

· Average healthcare costs have increased significantly in recent years. In 2013 a retiree would need to have saved between $220,000 and $360,000 to cover their healthcare expenses.

· Medicare cuts have made it more difficult for some seniors to find providers that offer healthcare, which means they often have to pay out of pocket.

There are also other changes that help some retirees while hurting others. The new Affordable Care Act is one of them. Many people with preexisting healthcare problems will be able to save money on their healthcare costs when the ACA goes into effect, but others are going to have to pay more.

Healthcare costs will continue to be a problem for many retirees in the near future. You will need to make sure that you prepare for them.

Preparing for Healthcare Costs Before You Retire

Anyone that plans on retiring before they are eligible for Medicare will need to be prepared to pay for expensive healthcare costs. Even if you have Medicare you will still need to pay a lot of money for your care. Here are some ways that you can prepare for these costs.

Start Saving Before Retirement

You will need to start saving money long before you retire. Try putting as much money as possible into your IRA, 401K and other tax sheltered savings accounts. One expert advises that you will have a 90% chance of being able to cover your healthcare costs if you save $360,000 before retirement. You will want to save even more if you have existing medical problems such as diabetes or eye problems. Seeing an endocrinologist or ophthalmologist will be easier if you have prepared for it ahead of time.

Plan for Higher Costs if You Are High Income

Medicare Part D beneficiaries making over $170,000 a year will need to pay more for their benefits. People making between $170,001 and $214,000 will pay 40% more plus $11.60 more for coverage. Those making over $428,000 will be paying 200% more plus an extra $66.60 every month. Anyone that exceeds these incomes will need to plan for these costs.

Choose the Right Plans Before and After Retirement

Both patients receiving Medicare and those seeking private insurance on the exchange will have a number of options. You will need to find a plan that offers the coverage that you need. If you have serious medical conditions then you may need to choose a plan with higher premiums and lower out of pocket expenses. It may be a good idea to purchase a silver or platinum plan on the health exchange if you don’t qualify for Medicare, because these plans are cheaper for people who have many healthcare costs.

If you are making less than 250% of the federal poverty line then you may qualify for an enhanced silver plan. You may be able to deduct a lot of your income after retirement so you should speak with your insurance agent or an ACA Navigator to see if you can qualify.

About the author: Kalen is finance and consumer writer. He shares tips on preparing for new changes in a changing world.

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