Protecting your assets from medical bills should always be prioritized in your retirement plans. These health care costs, as we’ve mentioned in several of our previous articles, can drain your nest egg quickly.
And more than choosing health insurance for retirement, a deeper understanding of what these medical bills are will help you and our other boomer readers to realize and come up with ways to save your nest egg. And of course, you’ want to have access to enough funds and assets should something happen during the twilight years, right?
As such, we’d like to share some important pointers for you to consider when preparing for your future. Through this approach, we hope that you gain a clearer perspective on these health care costs – and the solutions that you can integrate into your retirement plan to safeguard both your finances and well-being during the golden years.
Discover the Damage that Medical Bills Can Bring
To understand why medical bills should be tackled when preparing for retirement, you must first find out how catastrophic these costs may be for your future.
According to a Fidelity report featured in a Time Money article, the average couple retiring at age 65 would need $260,000 set aside to cover potential medical costs during retirement.
The figure, a 6% increase from the $24,000 of the previous year, proves that health care costs are rising – a deterrent amongst boomers with dreams of hope for the future.
Taking into consideration that the study assumes couples are covered by Original Medicare Plans (made up of Part A and Part B) also shows the substantial impact that out-of-pocket health care costs (otherwise known as gaps, such as coinsurance fees, copayments, and deductibles) have for Medicare beneficiaries.
Illustrating the gaps further, a Commonwealth Fund survey last year revealed that 15 million Medicare beneficiaries spent, more or less, 20% of their household income on insurance premiums and the gap payments.
20% is already a large percentage to consider, but for Medicare policyholders with multiple or chronic health conditions, the out-of-pocket health care costs may be more than the said figure.
Now, couple the above scenarios to the possible lack of a boomer’s health and financial literacy skills – chances are, managing funds during the retirement years may be an even more challenging prospect:
- 40% of respondents from a Prudential Investments finding featured in a Business Insider article showed that these people “don’t know what to do to prepare for retirement.”
- Only 55% of boomer respondents in a survey conducted by the Insured Retirement Institute has set aside funds for retirement. This was a decrease from the previous year’s count of 58%.
- Individuals with low health literacy skills are more likely to spend more for treatments (almost $2,500 per year, even for medical procedures deemed unnecessary).
With all these said, is there any hope for boomers to cling on to for a safe and comfortable retirement? Let’s find out more below on how one can protect their retirement assets.
Here’s When Medicare Supplement Insurance Plans Matter
Medicare Supplemental Plans, also called Medigap, will provide policyholders the needed safety net when encountering expensive medical bills. Designed to address the gaps directly, Medicare Supplements will help boomers make the most out of the retirement years.
With ten standardized Medigap plans to choose from, individuals are given the power to pick a policy that will best address their specific needs or circumstances.
Focusing on the medical bills, all Medicare Supplement Plans provide these as basic coverage:
- First three pints of blood coverage (in a given calendar year)
- Medicare Part A coinsurance fee coverage
- Medicare Part A copayments coverage (deals with hospice care)
- Medicare Part B coinsurance fees or copayments coverage
Additional Medicare Supplement Insurance benefits are also available. From foreign travel coverage to high-deductible plan offerings, one simply needs to consult with an agent in choosing the right plan that will provide the proper benefits.
Speaking of the agents, private insurance companies sell Medicare Supplements. As such, an applicant has the advantage to shop around the market to select and compare Medicare Supplement costs among different companies.
Basically, Medigap policies help transform the coverage that Original Medicare Plans provide into a full retirement solution against expensive medical bills. Of course, it does depend on a person’s circumstances on how these out-of-pocket health care costs need to be addressed, but a Medigap plan delivers viable and customized solutions perfect for any boomer problem.
Protecting your assets against medical bills during retirement may be hard, but securing the right steps and mindset in seeking out solutions will make the twilight years bearable. Do you have other tips to share? Let us know below.