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Understanding Healthcare Costs & Medical Expenses in Retirement

An elderly man is happy to better understand the healthcare costs and medical expenses to expect in retirement

Part of the aging process is making sure your health is cared for later in life, which includes enrolling in Medicare. While you’re first eligible to apply for Medicare three months before your 65th birthday, some people will still be working during that time and therefore will still have healthcare through their employer. It’s important to know your Medicare options at retirement and to understand what kind of expenses come with it. In this article, we’ll help you learn more about the cost of Medicare and how having the right coverage can benefit you as you approach retirement.

What are the average costs for healthcare and medical expenses?

Healthcare and medical expenses will vary significantly depending on factors like an individual’s location, medical history, type of care needed, type of insurance and more. The national healthcare expenditure in the US in 2021 averaged $12,914 per person.

The true cost of Medicare also depends on many factors, including plan type, premiums, copayments, coinsurance, deductibles, out-of-pocket-costs and your choice of provider. Typically, most people will not pay for a premium for Medicare Part A if they or their spouse paid Medicare taxes for working for a certain amount of time (about 10 years in most cases). If you don’t qualify for premium-free Medicare Part A, you can expect to pay $278 or $506 each month for Part A, depending on how long you or your spouse worked and paid Medicare taxes. The monthly premium for Medicare Part B will be $164.90 each month or higher depending on your income.

Medicare Part A & B (Original Medicare)

Original Medicare—also known as Part A and Part B—provides coverage for eligible Americans age 65 and older. Those younger than 65 with certain health conditions (end-stage renal disease, ALS or certain disabilities) may also be eligible for Medicare. 

Overall, original Medicare only covers about 80% of your medical costs. However, there are several supplemental Medicare plans that can provide additional coverage and peace of mind.

Medicare Part C (Medicare Advantage)

Medicare Advantage Plans (Part C) can offer an alternative to Original Medicare (Parts A and B). These plans are offered by private health insurance companies that are approved by Medicare and are required to offer the same benefits as Original Medicare, but can also include additional coverage. Some policies through Medicare Part C include supplemental benefits like prescription drug, vision, dental, hearing or wellness program coverage.

Learn more about Medicare Advantage Plans.

Medicare Part D (Prescription Drug Plan)

Medicare Part D, also known as prescription drug coverage, is provided and paid for separately from Original Medicare. It is a federal program that began in 2006, providing Medicare beneficiaries access to retail prescription drugs at affordable copays. Medicare Prescription Drug Plans are intended to give you broader healthcare coverage and potentially save you money.

Learn more about Medicare Prescription Drug Plans

Medicare Supplement Plans (Medigap)

Medicare Supplement Insurance Plans, also known as Medigap, supplements Original Medicare, helping cover some of the healthcare costs not covered by Parts A and B. Medigap coverage can help cover out-of-pocket costs such as deductibles, coinsurance and copayments. The monthly premium for this kind of plan varies from person-to-person, but the premium cost is often offset by lower annual out-of-pocket costs.  

Trying to find the Medicare Advantage plan that is right for you? Let SelectQuote help.

Taking care of your health as you age is critical, and finding the right Medicare coverage can make it much easier. At SelectQuote, we quickly and easily compare available Medicare Advantage and Supplement plans to help you find the right fit for your needs with less hassle. We’ll take the time to better understand your unique situation, providing you with unbiased quotes from many highly-trusted carriers in just minutes.

We do the shopping. You do the saving.

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