Managing Retirement Health Care Expenses: How to Save While Staying Healthy

managing health care expenses


One of the most challenging aspects of planning for retirement is managing health care expenses. The way health insurance operates changes as you age, especially when it comes time to retire. Are you ready to manage those Medicare expenses when the time comes?

Whether you’ve started planning for the future or not, here are a few ways you can better manage health care expenses in your future.

Understand What Your Health Insurance Covers
Medicare benefit payments totaled $597.2 billion in 2014. While that’s a significant number, it doesn’t mean Medicare is free. Medicare Part A may come without a premium, but you’ll still be required to pay premiums for both Part B and Part D. The standard premium for Part B is $134 or higher, while the premium for Part D varies depending on the plan you’re enrolled in. Medicare may cover regular medical visits under these premiums, but other expenses such as co-pays and hearing, vision, and dental-related treatments may be out of your own pocket.

Why Invest in a Medicare Supplemental Plan?
Investing in Medicare supplement insurance is a smart move, no matter how much of a healthy lifestyle you live. Medical care costs money, and a traditional Medicare plan may not cover every expense related to your overall health. Also known as a Medigap plan, this investment can help you save money as a retiree. That being said, you’re required to have Medicare Parts A and B before you qualify for this option. Plan ahead!

Don’t Forget About Income-Based Surcharges
Medicare currently uses a two-year period to determine whether or not income-based surcharges apply to any one client. That means a client’s 2015 income can be used as a basis to determine whether income-based surcharges will be applied in 2017. A few things to remember about this include:

  • This calculation draws on traditional wages, self-employment income, and a variety of other income sources
  • Tax-free income during retirement is not included in this calculation
  • Roth IRAs and Roth 401(k)s are excluded from income-based surcharges
  • Annuity payments will not increase income-based surcharges

Once you understand and put these tips for managing health care expenses into play, creating a retirement budget and spending wisely as you grow older may be more feasible. If you have questions or concerns, don’t hesitate to contact Banker’s Fidelity.


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