Calculating Healthcare Costs in Retirement

Discuss your Retirement Healthcare

Do you understand the link between healthcare costs in retirement and your financial security?

Many do not.

We are here to help you draw a link between the two, which will ultimately lead to a better understanding of the importance of each. Our healthcare cost retirement calculator will give you the opportunity to estimate your health care costs prior to retirement, allowing you to properly prepare by factoring this figure into your future financial plan.

Importance Of Calculating Healthcare Costs In Retirement

Employee Benefit Research Institute studies predict that in the years to come there will be a major deficit in terms of the money retirees require to afford rising health care costs and the income benefits that they have available to them to pay these mandatory expenses. Calculating your health care costs prior to retirement will allow adequate time for you to adjust your budget and save for expenses that will be obligatory to you in your later years.

What Factors Should Be Considered When Calculating Healthcare Costs?

Accurately calculating healthcare costs in retirement does not have to be one of the most difficult future costs to measure. The average life expectancy for a retired 65 year old male is 19 years (84) and 23 years for a female (86), which might be a good starting point in calculating health care costs in retirement. However, many other factors will play a major role in the amount of income needed to afford medical expenses in retirement. If one simply uses life expectancy to calculate their health care costs in retirement serious shortfalls are highly likely.

In addition to life expectancy one must also consider age, gender, height, weight, education, personal medical history, family medical history, exercise, diet, lifestyle, general health status, insurance premiums and out-of-pocket expenses. With all of these contributing factors required to accurately calculate health care costs in retirement you can imagine the complicated algorithm and the likelihood for error. Furthermore, one must consider medical advances and predictions for longer life expectancies. It can all get very complicated, however, it is essential in formulating a useful financial plan for your retirement.

Where Does Medicare Come Into Play?

Thankfully, there is Medicare. Medicare, if structured in a correct manner it will cover most medical expenses in retirement, especially if one coordinates the benefits in a proper manner.

Medicare is a federally governed health insurance program designed to provide retired seniors, age 65 and over, with affordable healthcare options. The Medicare program itself consists of many different plans, each of which cover certain expenses. Here is a brief overview of each.
– Medicare Part A
“Hospital insurance.” Covers inpatient hospital stays only.
– Medicare Part B
“Medical insurance.” Covers outpatient doctor visit treatments. NO specialists.
– Medicare Part C
“Medical advantage plan.” Combines the benefits of private provider insurance with Medicare Part A & B and may include a prescription drug plan..
– Medicare Part D
“Prescription drug coverage.”
Supplemental Coverage
-“Medigap Plans.” Covers the “gaps” within Medicare Parts A and B which are often co-pays, deductibles, extension of certain types coverage and excess charges.

It is important to have a full understanding of each plan, what it covers, and what it does not when factoring in costs to your budgetary retirement plan.

What is Medicare:

When enrolling into Medicare there are 2 options:

  1. Original Medicare: a retiree chooses to select Medicare Part A and Part B, purchases a stand-alone prescription drug plan (Part D) and covers the “gaps” of Part A and Part B with a Supplemental or Medigap Policy.
  2. Medicare Advantage Plans: these plans are administered through private health insurers who are overseen by the Centers for Medicare Services (CMS). They most provide the exact same benefits of Medicare Part A and Part B, but may also include a drug plan (Part D) as well as other types of coverage that Medicare does not provide, like dental and vision.

How Medicare Works:

If a retiree selects the route of Original Medicare (option 1) the path to coverage can be simpler. As long as the retiree is admitted as an “inpatient” into a Medicare recognized facility for a medially necessary need then all costs are covered.

For Medicare Advantage Plans a retiree must meet with the plan’s networks in order for coverage to begin.

What Are Healthcare Costs In Retirement

In terms of the costs associated to Medicare it all boils down to what you the retiree is responsible for.

Original Medicare is broken into 4 parts:

  1. Medicare Part A: covers costs associated with being admitted as an inpatient into a Medicare recognized facility. This is premium free for those who qualify.
  2. Medicare Part B: covers the costs of physicians and healthcare providers. $144.60 a month in 2020.
  3. Medicare Part D: prescription drug coverage. $40.81 a month for premiums as well as a deductible of roughly $400.00 on a national average
  4. Supplemental Coverage of Medigap Coverage: fills in the “gaps” of Original Medicare (Part A and Part B). $178.05 a month for a Plan G Medigap Policy, which happens to be the most robust Medigap plan a retiree can have. Please note that no Medigap Plan will cover the Part B Deductible which in 2020 is $198.00 for the year.

Calculating Healthcare Costs in Retirement

For those enrolled into Original Medicare the costs to be fully insured and be free of all networks are those premiums within this coverage.

On a national average the cost of your health coverage in retirement is:

  • $4,361.52 in premiums
  • $598.00 for out-of-pocket deductibles for Part B and Part D
  • Total $4,959.52

Please note that these are national averages. It is highly recommended that you meet with an experienced financial representatives that fully understand the Medicare program as costs can be exponentially cheaper for those in good health.

The Role Of Social Security When Calculating Health Care Costs In Retirement

Not all Americans have been fortunate enough in their careers to set aside just over a quarter of a million dollars for health care expenses in retirement. Those who are entering retirement with limited assets will likely rely on their Social Security benefit to cover some of their medical costs. For moderate to low-income individuals this expense may account for a large portion of their Social Security benefit leaving them little to next to nothing remaining.

Use Our Health Care Cost Retirement Calculator For Free Today

A properly configured financial retirement budget must take many fixed and variable factors into consideration. The most difficult and risky of all factors is potential health care costs in retirement, of which is extremely difficult to precisely approximate. This cost is a vital figure in producing a useful budget ultimately offering you future financial security. The underestimation of such a number can have potentially disastrous effects on even the most seemingly prepared retirees.

Use our FREE online health care cost retirement calculator for a reliable, accurate and fast estimate of your potential medical expenses and get the financial peace-of-mind you desire, today. For more information, connect with us on Facebook or contact us today.

What is HealthcareRetirementPlanner.com

Healthcare Retirement Planner (HRP) is a comprehensive solution that helps identify potential problem areas in a retirement plan and design options to minimize the problem.

On an ongoing basis, HRP conducts research and aggregates all data to be used in its analysis algorithm. Pulling from areas such as The Congressional Budget Office, Centers for Medicare and Medicaid, polling individual insurance carriers across the United States along with private research firms, and positions HRP as having the most accurate information and calculations available.

Within the calculation process there are many variables that need to be considered, as the solutions are customized to each individual’s retirement plan. Variables that are required to analyze financial situations include, but are not limited to: age, gender, location, overall retirement income, types of retirement income, inflation and COLA. HRP has simplified this process.

The process of using HRP is straight forward. Simply by answering a few simple demographic questions, entering retirement asset information and income, along with assorted growth rates, you are supplied with a detailed year by year analysis that projects out 20+ years as to how the investors’ current financial plan will be impacted by their Medicare costs and the impact on their Social Security benefit.

Who is Jester Financial?

We are comprised of Financial Professionals, Medicare Specialists, Technology Experts and the foremost authorities on how this one cost will affect your bottom line especially when your health is on the line.

There are many financial institutions that do tremendous work when it comes to asset building, planning for college or creating stock/bond/mutual fund portfolios, but addressing concerns of affording health care costs…well for that, there is us.

Healthcare Retirement Planner was created with one purpose in mind: to provide data, education and tools necessary to help the financial industry create better financial futures and to plan for one of the biggest expenses in not only retirement, but life – their health.

In a time where health costs dominate the media, the political landscape and your bottom line, retirement planning with all of the facts have never been more important.

Origin of Our Data for Healthcare Cost in Retirement

On an ongoing basis, HRP conducts research and aggregates all Healthcare data to be used in its analysis algorithm. Pulling from areas such as The Congressional Budget Office, Centers for Medicare and Medicaid, polling individual insurance carriers across the United States along with private research firms, and positions HRP as having the most accurate Retirement information and calculations available.

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