Planning for Retirement? Pay Attention to Health Care

February 2, 2010

If you’re planning for retirement pay close attention to your health care options. Why? Because according to financial journal MarketWatch, this is likely to be one of the biggest costs you’ll have to absorb once you leave the workplace, even with the federal Medicare program providing your basic coverage.

Why is health care so expensive for seniors? There are several reasons, including:

  • You must often pay substantial out-of-pocket fees and costs
  • Medicare doesn’t cover long-term care, beyond a brief transition period
  • There are multiple parts to the Medicare plan that cover different aspects of care (hospital stays, regular doctor visits, prescription drugs)
  • Even above the three main parts to Medicare, you’ll have to make many, many choices about which benefits to choose and when they should begin, which is especially difficult if you have continuing health coverage from your union or employment when you enter retirement.

So what should you do to help keep your financial future easy to navigate? Charles Ellis, co-author of The Elements of Investing advises that simplicity is the key.

While keeping it simple may be wise, the advice is a bit vague. Here’s some that isn’t: you should know that you have the option of choosing to buy Medigap or a Medicare Advantage plan – both are supplemental policies that extend your health coverage. As well, you can choose to purchase private long-term-care insurance, in case you ever need ongoing nursing home care, or home health care, later on in life.

But how do you know what’s essential to saving money on health care in retirement, and how do you know what you can live without, and what must be purchased immediately? For that matter, how do you even know when the window for Medicare eligibility even begins?

One invaluable source is the Medicare Rights Center, they’re a non-profit consumer advocacy group with a mission to help senior citizens and those nearing retirement age in understanding how Medicare works, how to apply, and what changes may be occurring as health care reform moves closer to actuality.

Health care may be one of the biggest expenses of retirement, but it doesn’t have to be the most confusing. Get informed now, so you can be confident in your coverage later.