Take Out a Long-Term Care Insurance Policy
Long-term care insurance (LTC) pays for in-home help with daily tasks, adult daycare, and nursing home care, among other eldercare services.
While premiums can be high, without LTC, the out-of-pocket prices for care could theoretically wipe out retirement savings. For example, in 2023 (the most recent figures), the median annual cost of a home health aide was $75,504, while the median cost of a private room in a nursing home was $116,796, according to a recent Genworth long-term care report…
If you have a high-deductible health plan as your insurance, you may be able to open a tax-advantaged health savings account (HSA). This account allows you to take tax-free withdrawals for qualified medical and health care expenses.
HSA funds can be used for in-home care, Medicare and long-term care insurance premiums, co-pays, dental, hearing, and vision, and other health care expenses. Funds roll over year to year, so your tax-free savings can build up.
At age 65, when you are eligible for Medicare, you must stop contributing to your HSA. Any money in the account is yours to spend (tax-free) on eligible medical or health expenses…
When you turn 65 and are eligible for Social Security benefits, you'll be automatically enrolled in Medicare: Part A, which covers hospital expenses, and Part B, which covers doctor visits, labs, X-rays, and ongoing care. Because basic Medicare do not cover everything you may need, there is a supplemental insurance called Medigap.
You can purchase Medigap insurance from private insurers during Medigap’s annual six-month open enrollment period, who are required by law to offer standardized policies designed to help retirees supplement basic Medicare (Parts A and B). The cost of its premiums will depend on where you live, the insurance company selling it, and the Medigap plan you choose…
Explore a Health Reimbursement Arrangement
A health reimbursement arrangement (HRA) is an employer-funded group benefit some employers offer their retired employees. While less common than other benefits, this plan reimburses up to a fixed amount each year. An HRA for retirees (also called a post-employment benefit) allows retired employees to access the HRA funds for health and medical expenses, including Medicare and insurance premiums.
Like all retirement benefits, HRA terms and conditions vary by employer, but there are no IRS rules around annual limits to contributions (unlike an HSA).24 So, if your employer offers an HRA, it can be a good tool in your financial arsenal to cover health care expenses in retirement.
Many insurance plans cover telehealth visits. These virtual appointments allow you to speak to a medical professional when you feel unwell without leaving your home…
Keeping up with primary care checkups, annual tests like mammograms, colon cancer screenings, and vaccinations such as flu are all ways to protect your health and bottom line.
Preventing certain diseases and illnesses or catching health complications early may save you money in the long run, making telehealth and preventative care options good tools to fight the high cost of health care in retirement.
Having a contingency plan and setting aside emergency funds for unexpected health care expenses is another layer of financial protection. TIAA recommends individuals save at least six months (and ideally 12 months) worth of expenses in a money market or other easily accessible savings account to cover medical and other types of emergencies, including coverage for a one-time or isolated medical event.
You can read the full article here.
While it is impossible to predict what kind of health care needs you will face in your retirement years, planning for a number of contingencies in advance can ease the stress of any issues you may face. According to Investopedia.com, most retirees grossly underestimate health care costs. Knowing the tools you can use to save on those costs can go a long way toward protecting your future.