Many retirees or people considering retirement forget to budget for healthcare when they are planning for retirement. After all, most employees receive health insurance through their employer. However, medical expenses are one of the largest expenses of a retired person, and the costs are often underestimated.
There are generally four types of health care premiums you have in retirement:
Medicare Part B – These premiums provide original Medicare, including medically necessary care and can include outpatient care and preventative services. These premiums are often automatically deducted from your social security distributions. As for 2023, the standard monthly premium cost is $164 but can be higher based on your income. That is a slight decrease ($5.20) from 2022
Medigap – This supplemental insurance provides coverage for costs not covered by basic Medicare. Medigap may not cover dental or vision care, potentially leaving you with some big expenses. These premiums vary based on the plan.
Medicare Part C – This is another name for Medicare Advantage, which may cover routine dental, vision, and hearing. These are sold by private healthcare companies but overseen by Medicare. These premiums also vary based on the plan and your location.
Medicare Part D – This optional program provides a prescription drug benefit. For 2023, the standard annual premium will be $31.50, a .68¢ decrease from 2022.
Rising health care costs are a reality, and it’s important to budget for them in retirement. It’s also important to note that Medicare does not pay for long-term nursing home care. If you are concerned about paying for nursing home care, please contact our firm for a free estate planning consultation.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
