What to Expect When Planning for Health Insurance in Retirement

For many people, one of the biggest concerns about retirement is the high cost of medical expenses. As you grow older, you will probably need more frequent visits to the doctor, and you may rely on expensive medications to maintain your health. It can be scary to look at retirement and wonder how you will afford these healthcare expenses without the employer-based health insurance you had while working.

Fortunately, there are many programs and resources for retirees that can make healthcare during retirement more affordable. You can access health insurance through Medicare, and there are other ways to prepare your finances to continue to be able to afford the medical care you need.

It’s also important to understand that our current healthcare system is extremely complex and probably not sustainable. It will most likely change in the future, and we hope that those changes will create a system that is more affordable, accessible, and easy to understand. 

Until that happens, however, it’s vital to make health insurance decisions based on your needs throughout retirement. Play the long game instead of just choosing the coverage that fits your needs right now.

Choose Your Medicare Plan as Soon as Possible

While you probably had health insurance through your employer while you were working, you lose access to that when you retire. But there’s good news: You can get health insurance through Medicare as soon as you’re within three months of turning 65.

The U.S. government’s Medicare program has several parts. For example, Part A is insurance for hospital care, and Part B covers things like preventative screenings and outpatient care. 

You can sign up for Medicare Parts A and B when you become eligible (i.e. when you turn 65). That’s also when you need to decide if you want to sign up for “extra” Medicare services like Part D, which is designed to lower how much you pay for prescription drugs. 

You can also purchase Medigap insurance. This is a private insurance policy designed to reduce how much you have to pay for your portion of certain Part A and Part B expenses. It may seem like you’re just increasing the cost of your health insurance by purchasing a supplemental plan, but this type of coverage can significantly lower your healthcare expenses throughout retirement. 

Medigap policies, which are also known as supplemental coverage, are standardized throughout the country. In most states, they are known by plan letters. For example, Plan G is a popular Medigap plan that covers 100% of your Parts A and B copays and other charges you may incur with your Medicare coverage.

The most important thing to understand about Medigap insurance is that you must choose the right plan for your whole retirement. The best time to buy a Medigap policy is when you enroll in Medicare. You can’t usually purchase a policy or switch to a different Medigap plan as you get older, especially if you have any medical conditions.

For example, Plan G covers hospice expenses and care at a skilled nursing facility. You might not need that sort of coverage now, but there’s a good chance you may later in life. Before you choose a supplemental plan, think about what your needs will be throughout retirement, not just right now.

Save Money on Drug Coverage Early in Retirement

Unlike Medicare Part A and Part B, Part D (drug coverage) isn’t the same across the board. There are several Part D plans, and you can change your coverage each year. 

Take the Initiative to Care for Yourself

There’s a common refrain we hear from many of our clients; they wish they’d taken the initiative to plan their healthcare coverage sooner. Even if the U.S. healthcare system ends up changing down the road and lowering the cost of medical care, it’s essential to do what you can to take care of yourself right now. 

It’s never too early to start preparing for your medical care in retirement. Take the time to find resources to help lower the costs of healthcare. For example, GoodRx is a program that can help reduce the cost of prescription medications. 

You can work with a financial planner to save for potential expenses like long-term care. It’s not possible to prepare for every possible expense, but a comprehensive retirement plan can make the potential cost of healthcare less overwhelming.

Prepare for Retirement With Help From an Expert

Healthcare expenses are a big financial concern for most retirees, but there are many benefits that Medicare offers. Yes, the Medicare system can be complicated and hard to navigate, but it does provide affordable health insurance for retirees. The vast majority of our clients are grateful for the coverage they get through Medicare.