(Maurie Backmann)
If you are nearing retirement, you may be worried about covering health costs. The average 65-year-old man is estimated to spend $143,000 on health care throughout his retirement, according to Fidelity, while the average 65-year-old woman expects $157,000. And a lot of that comes from the unavoidable costs you’ll incur under Medicare.
Contrary to what you may have thought, Medicare is by no means free (although Part A, which covers hospital care, is generally free for enrollees). As such, it pays to do whatever you can to keep your costs down. Here are some steps you can take to save on Medicare and keep more of your retirement income and savings for yourself.
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1. Register on time
Your initial Medicare enrollment window begins three months before the month of your 65th birthday and ends three months after that month. So, all things considered, you have seven months to sign up.
If you don’t enroll in time, you risk surcharges on your Part B premiums for going too long without coverage, so it’s important to avoid this trap. If you’re still working at age 65 and have access to a group health plan, don’t worry, you’ll have the option to enroll later and avoid this penalty. But otherwise, pay attention to your enrollment window to avoid higher Part B costs on a lifetime basis.
2. Choose the right drug plan
If you stick with the original Medicare, you’ll need a Part D drug plan. would do for another plan.
That said, don’t just choose the drug plan with the lowest premium. Instead, do your research to determine which plan offers the best coverage for the medications you take.
All Part D plans group drugs into tiers that dictate how much you pay for them. Pay attention to the location of your specific medications so you don’t end up with a massive bill.
3. Consider an Advantage Plan
Medicare Advantage is an alternative to original Medicare that may be a more cost-effective choice for you. As is the case with Part D, you can choose from different plans, so you’ll need to do your research and figure out what makes the most sense.
One of the benefits of signing up for an Advantage plan is that you’ll typically get coverage for services like dental, eye exams, and hearing aids, which Original Medicare won’t pay for. Plus, some Advantage plans offer additional perks that could save you extra money, so it pays to shop around and see what choices are available in your area.
4. Take advantage of free services
As a Medicare enrollee, you are entitled to a number of free services each year, such as a physical exam and certain drug tests. It pays to take advantage of these services because oftentimes keeping an eye on your health can prevent minor issues from escalating into larger and more costly ones.
Are you ready for Medicare?
The cost of health care under Medicare tends to surprise older people. Now that you know what to expect, you can start budgeting in advance. Another good bet is to set aside money for future healthcare costs in a health savings account, provided you qualify. You will need to be enrolled in a high deductible health insurance plan to qualify.
The beauty of funding a health savings account is that your money will never expire. As such, you can contribute throughout your career, keep those funds in retirement, and then use them to cover your health insurance premiums, deductibles, and any other expenses for which you are responsible.
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