Before you retire, ask your pharmacy for a Medicare Part D report. It will provide a rundown of what your medications will cost in retirement and how much is covered for the various Part D options - Image USA Today

 

Four Actions to Help Prepare for Healthcare Expenses in Retirement - 1
By Saghir A. Aslam
Rawalpindi, Pakistan

(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities.)

Healthcare expenses in retirement can vary greatly, which is why developing a specific-to-you approach for these costs can be a key part of effective retirement planning. Knowing your expected healthcare costs and coverage options could give you a better chance of meeting those obligations throughout your retirement — so you can stay focused on the excitement of what comes next.

Here are some strategies to consider when planning for health care expenses in retirement.

Estimate your costs

Numbers vary widely. But here’s what we know: Many older adults in the United States are postponing or skipping medical care due to cost.1 This not only leads to worse health outcomes overall but ultimately increases overall healthcare spending. So, how does one calculate the right number to get them through retirement? The answer might be counterintuitive. For example, your healthcare costs in retirement can be greater if you’re healthier because you may need medical care over a longer life span. To help you develop an estimate, there are simple healthcare cost calculators, such as this one from the Kaiser Family Foundation.

Determine your expected healthcare benefits

Few employers continue benefits into retirement, so you will need to explore your coverage options if you aren’t yet 65 and eligible for Medicare. (The increasing prevalence of freelance and contract work, and the overall rise in the gig economy, may mean that you’re self-insured and already have insight into that expense.)

Even if you are eligible for Medicare, you need to determine what the government will pay. Research your Medicare options online. Medicare might not cover what you expect.

Some examples

Medicare may pay only a portion of the costs for people staying in a rehabilitation center or nursing facility, and there are restrictions on what is covered.

Coverage is limited to certain skilled care procedures performed by a registered nurse or doctor, such as intravenous injections and physical therapy. It also doesn’t cover the cost of procedures such as routine dental care and hearing exams.

Procedures done to improve your appearance without a medical need are not covered.

Consider researching your medication coverage as well. Before you retire, ask your pharmacy for a Medicare Part D report. It will provide a rundown of what your medications will cost in retirement and how much is covered for the various Part D options. Speaking of pharmacies, consider doing some comparison shopping to see if you could save money getting your prescriptions filled elsewhere. Switching to a mail-order pharmacy for regularly scheduled medications might also be worth considering.

You can sign up for Medicare Part A anytime after you turn 65. Your Part A coverage starts six months back from when you sign up or when you apply for benefits from Social Security (or the Railroad Retirement Board). Coverage can’t start earlier than the month you turn 65.

Also, be aware that if you are contributing to a Health Savings Account (HSA), you should stop those contributions six months before your Medicare coverage takes effect to avoid a tax penalty.

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, or does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)

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