We’ve already reached the halfway point of the year. And as we near the official start of summer, it’s a good time to pause, take a breath, and review our month-by-month financial roadmap. This month’s topic? Future health care costs.
While summer vacations and family gatherings might be at the top of your “fun” list, I encourage you to take some time to look at this topic, which sometimes catches pre-retirees and retirees off guard.
At Everest Financial, Inc., here in Fort Mitchell, KY, I frequently see clients underestimate these upcoming expenses. The reality is that proactively planning for medical costs is one of the most critical steps you can take to protect your hard-earned retirement assets from unexpected depletion.
So let's break down three essential areas you need to review:
navigating your Medicare choices
the critical need for supplemental change
proactive long-term care planning
Navigating Your Medicare Choices
When most people think of retirement health care, they think of Medicare. While it is a foundational piece of your retirement puzzle, it is vital to understand that Medicare is not a free, all-inclusive pass for medical services.
Generally, Part A covers hospital stays, while Part B covers outpatient services and doctor visits. However, neither covers 100% of your costs. You will still be responsible for ongoing premiums, deductibles, and co-insurance. Furthermore, prescription drug coverage requires enrolling in a separate Part D plan.
Taking the time to understand these parts and accurately projecting the associated premiums based on your retirement income level is the first step to help ensure your budget isn't derailed by basic out-of-pocket medical bills.
The Critical Need for Supplemental Coverage
Because Original Medicare leaves coverage gaps, securing supplemental insurance is generally necessary to truly protect your nest egg. You essentially have two routes: purchasing a Medicare Supplement policy (often called Medigap) or opting for a Medicare Advantage plan (Part C).
Medigap policies work alongside Original Medicare to help pay for out-of-pocket costs like copayments and deductibles, giving you highly predictable monthly costs. On the other hand, Medicare Advantage plans act as an alternative to Original Medicare, often bundling hospital, medical and prescription drug coverage into a single plan, sometimes with added perks like vision or dental.
Choosing the right supplemental path depends heavily on your specific health status, preferred network of doctors and budget. Making an informed choice here helps put a definitive ceiling on your annual medical expenses.
Proactive Long-Term Care Planning
Perhaps the more notable misconception I encounter here at Everest Financial, Inc. is the belief that Medicare will pay for long-term care facilities or extended in-home health aides. Simply put, it generally does not.
With the cost of a private room in a nursing home or full-time home care continuing to skyrocket, an unexpected health event can rapidly drain the assets you spent decades building. Planning for long-term care is essential.
Whether we explore traditional long-term care insurance, modern hybrid life insurance policies with long-term care riders or strategies to self-fund using your existing portfolio, having a documented plan is never a bad idea.
What To Do Next
Consider how the three topics mentioned impact you and your family. And add to the fact that, perhaps the company you worked for is providing at least a portion of your former health care plan, or your health situation has changed, and you need to adjust the amount and type of health care coverage you want and need.
These tips are designed for people of all ages, and sometimes these retirement and health care financial roadmaps are hard to read, whether you’re in your 30s or 40s and in the heart of your work life, or you’re nearing retirement or already are retired and worrying about whether you will outlive your money.
At Everest Financial Inc., we want to see you thriving, not just surviving, in retirement. And budgeting now for health care costs later puts you one step closer to enjoying your later years on your financial terms.
So stop by our Fort Mitchell office at 305 Artillery Park Drive, give us a call at 859-291-9290, visit everestfinancial.net, or send an email to joe@everestfinancial.net, and let’s schedule time to discuss future health care financing options that will fit your needs.