For some retirees, keeping medical costs low is simply being good stewards of available funds. The less money they have to pay out, the more they’ll have for enjoying retirement and helping family members.
But for others, cutting healthcare costs is essential to survival. When living expenses are high but retirement income is not, keeping medical costs low is part of the balancing act of, “How will we manage until the next Social Security payment?”
A big part of your decision will be, “How will I pay for healthcare?” It comes as a surprise to some people that Medicare isn’t completely free. They’ve somehow gotten the impression that after working (and paying FICA taxes) their whole life, all healthcare is paid for by the Medicare program.
Some of it is. Medicare Part A, also known as “original” or “traditional” Medicare, is free and covers inpatient hospital care (after a deductible). However, the outpatient medical insurance known as Medicare Part B costs money, and retirees can choose other forms of healthcare coverage as well.
Here’s what you need to know about the various Medicare options, the costs of each and tactics to keep healthcare costs down overall.
How Medicare works—and doesn’t work
If you’re retired, then you already know that Medicare doesn’t cover everything. You’ve also already had to deal with the at-times confusing process of choosing retirement health care: Part A is free, but not Part B, C or D. Do I need Medigap or Medicare Advantage, or neither, or both?
If you haven’t stopped working yet but are making plans for when you do, good for you for being proactive instead of waiting until a month before retirement to figure it all out.
The monthly premium for Medicare Part B is $170.10 per month in 2022 for most beneficiaries (but can be as high as $578.30 for those with high incomes), with a $233 annual deductible, according to the Centers for Medicare & Medicaid Services. It does not cover routine vision, hearing or dental treatments. Medicare Part B also doesn’t cover the cost of a long-term care facility, although it will pay for the medical treatment you receive there.
Medicare Part C, also known as Medicare Advantage, is a way to get Medicare benefits through private insurance companies. It usually offers coverage for things that Medicare Part B doesn’t pay for, including dental, vision and hearing care (including hearing aids), and possibly things such as acupuncture, transportation, over-the-counter items, nutrition education and therapeutic massage. The average premium in 2022 will be $19 per month, which is lower than Medicare Part B. However, participants encounter higher cost-sharing with Medicare Advantage, up to a $7,550 out-of-pocket maximum.
Medicare Part D is optional prescription drug insurance. Like Medicare Part C/Medicare Advantage, it is provided by private insurance companies. The premium is based on income and ranges from $0 a month to $77.90 a month.
Medigap is supplemental coverage purchased from private insurers. It can be particularly useful for those who travel a lot or spend winters away from their homes. Medigap premiums are higher, but you’ll pay less out of pocket because your treatment will be covered first by Medicare and then by Medigap. Depending on the Medigap plan you choose, you might have few or no out-of-pocket expenses.
[ Read: How Medicare Works ]
Which should you choose?
The right plan or plans you should choose depends entirely on your individual circumstances. The federal government’s Medicare website offers a tremendous amount of information. However, some people find it helpful to consult a Medicare specialist—such as Boomer Benefits or Chapter—before they decide.
Keeping healthcare costs down
It isn’t just a question of premiums or co-pays. Focus on ways to improve any health issues you have and to prevent new ones.
Proactive choices can improve your health, thus cutting medical costs, and improve the quality of your life in retirement.
Use preventive care benefits
Medicare covers the cost of certain types of preventive care. Take advantage of these benefits, especially if there’s a family history of certain conditions.
Suppose a screening at your yearly wellness exam indicates that you’re pre-diabetic. Changes in diet and exercise can greatly improve or even dispel the condition. Flu, pneumonia, shingles and other vaccines can prevent illness or at least reduce the symptoms. And no one can deny that it’s better to catch colon cancer early than to treat it at Stage 4.
The healthier you remain, the less you’ll be spending out of pocket—either as co-pays or for things such as special diets or the need to take a rideshare or cab because you’re not well enough to drive to an appointment.
Aim for a healthier lifestyle
On the subject of prevention: Why not finally make good on that long-held promise to yourself to quit smoking or cut back on drinking alcohol? These changes can improve not just your health, but also your finances.
As a retiree, you have more time to exercise. According to the Centers for Disease Control and Prevention, older adults can find significant health benefits in regular physical activity. Even moderate exercise can improve heart health, blood pressure, bone density, muscle strength, stamina and flexibility.
Some Medicare plans include the “Silver Sneakers” program, which features fitness classes, gym activities, workout videos and other resources for people over age 65. However, exercise can be done in other locations: t’ai ch’i in the park, yoga videos in your living room, a mall-walking group, or walking up and down your apartment building’s stairwells with a friend.
According to the National Council on Aging, even older adults with mobility issues and chronic conditions can safely exercise. However, you should talk to your doctor about what’s appropriate for your current health and fitness level.
Note: Social isolation can have a serious effect on your health, according to the CDC. Exercising in group settings or even just walking with a friend could help prevent loneliness. The CDC offers other potential resources for improving socialization.
Retirees are at a greater risk for developing chronic issues such as arthritis or osteoporosis along with hypertension, heart disease and other illnesses associated with aging. This is exacerbated by the fact that more and more Americans are overweight at the beginning of retirement.
Older adults may face other diet-related challenges as well, including but not limited to:
- Having limited food-shopping options
- Living alone and not feeling motivated to prepare healthy meals
- Being unable to cook due to energy or mobility issues
- Not having enough money for fresh fruits and vegetables
Generally speaking, women over age 60 need 1,600 to 2,200 calories per day and men of that age need 2,000 to 2,600 per day. The U.S. Department of Agriculture’s updated dietary guidelines emphasize healthy choices while encouraging consumers to eat in ways that fit personal tastes, traditions, culture, medical conditions and fod budgets.
The National Council on Aging lists other food-related behaviors that can affect weight and nutrition:
- Eating too fast
- Watching TV or using a smartphone while eating
- Being unfamiliar with nutrition labeling on food packages
- Choosing unhealthy options when dining out or traveling
The USDA’s new dietary guidelines note that it’s never too early—or too late—to eat healthfully.
Fall-proof your home
Falling is the number-one cause of both fatal and nonfatal injuries for older people, resulting in more than 3 million emergency-room visits (including 800,000-plus hospitalizations) every year.
If you fall, you’ll likely spend money on things that Medicare doesn’t cover, such as over-the-counter painkillers or having to pay for help with things such as shopping, cleaning, walking the dog, and getting to and from physical therapy.
You’ll also pay in terms of pain, potential isolation while you heal, losing ground physically due to immobility and, perhaps, some permanent impairment. The National Council on Aging notes that the fear of falling again causes some older adults to “limit their activities and social engagements,” which can lead to additional physical decline.
Fall-proofing your home can help prevent drastic impacts on your retirement. It can also save your life.
The bottom line
To some extent, how much we pay for healthcare in retirement is out of our hands. We can’t know whether cancer or an aneurysm will show up after a lifetime of good health.
However, we can work to stack the odds in our favor. Choosing the right Medicare coverage is the first step. After that, we can make careful, informed choices about preventive care, diet, exercise, lifestyle and safe living spaces.
After all, you probably wouldn’t buy a big-ticket item without doing at least a little research. Being an informed consumer in terms of retirement health and safety can help make your golden years truly golden.
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