Showing posts with label how to save money on Medicare. Show all posts
Showing posts with label how to save money on Medicare. Show all posts

Monday, January 17, 2022

Medicare Costs are Rising - How Can You Control Them?

Despite the fact that Social Security beneficiaries will receive a 5.9 percent increase in 2022, a large part of this increase will be offset by rising Medicare premiums and other healthcare costs.  The premiums for Medicare Part B, the part which covers doctor visits and other outpatient care, is increasing by 14.55% or $21.60 a month.  This will impact lower income retirees more dramatically than their wealthier peers. 

According to the Kaiser Family Foundation, approximately one-third of retirees are spending at least 20% of their per capita income on healthcare costs.  In 2018, the average person with traditional Medicare spent $6,150 out-of-pocket. That amount was much higher for some people with large medical bills and expensive medications, and has caused many retirees to have to choose between buying food and paying for necessary medications. 

Deductibles are increasing, too. The annual deductible for Part A, which covers hospitalizations, is increasing 5 percent to $1,556.  The deductible for Part B, which covers doctor visits and outpatient care, is increasing 14.77 percent to $233.  These are not the only rising costs which Medicare recipients can expect.

What About the Cost of Medicare Supplements or Medigap Plans?

Many people purchase a Medicare Supplement plan (often called Medigap policies) to cover all or most of the cost of their deductibles and co-pays. However, the premiums can amount to several hundred dollars a month per person, so many couples and individuals are unable to handle this additional expense over their basic Medicare premiums.  About 20 percent of Medicare beneficiaries choose not to have a Medigap policy, which means they have to pay their deductibles out-of-pocket.  These unexpected bills can be devastating for some retirees who are barely surviving.

High Cost of Drugs and Drug Plans

Drug prices continue to be a major issue for many retirees, too.  You can purchase a Medicare Part D plan to help with the cost of your medication.  However, you will have to pay additional premiums for your drug plan, and they DO NOT cap the total amount that an enrollee must pay out-of-pocket each year for drugs. In 2022, a patient will pay a deductible of $480 until the insurance company and the enrollee have spent a combined total of $4,430 for medications. After that, the patient will pay a percentage of their drug costs, which could be a substantial amount if you have a serious, chronic illness.

Can The Government Help Control Medicare Costs?

There are some actions being proposed which could help with these rising costs, especially the cost of medications. The Build Back Better Plan, currently under consideration in Congress, would cap out-of-pocket Part D drug costs at $2,000 a year, beginning in 2024.  

Build Back Better would also allow Medicare to negotiate prices with drug companies for some of the most expensive drugs, starting in 2025 for Part D drugs, and starting in 2027 for Part B drugs.  The bill would also limit the cost of insulin to no more than $35 a month.

Of course, all this depends on the passage of the Build Back Better bill, or a similar bill designed to help people on Medicare. If no bill is passed, then drug prices will continue to rise, without a cap, for senior citizens. One action retirees can take is to write or call their Congressman and Senators and ask them to support this legislation. Since most of our representatives in Congress are not on Medicare, but on a special Congressional health insurance plan, many of them do not understand how serious the problem is for the average retiree.

What Can Individuals do to Control Their Medicare Costs?

In addition, there are several actions which individuals can take to help control their Medicare costs.

First, make sure you are following all the correct rules so you obtain your Medicare coverage at the lowest possible cost, and do not pay an extra large premium because of a mistake.  The handy book, "10 Costly Medicare Mistakes You Can't Afford to Make," (Ad) will help you make sure you follow all their rules. One mistake, such as signing up at the wrong time, can cause you to pay higher premiums for the rest of your life.

Next, if you have a low income, see if you qualify for both Medicaid as well as Medicare.  Medicaid pays most of the out-of-pocket expenses for low-income retirees, and replaces the need for them to have a supplement or a drug plan.  This can be a substantial savings.  In addition, if you need long-term care in the future, Medicare will not cover it, but Medicaid will.   Applying for both can be very beneficial, if you qualify.

Another tip is to do comparison shopping every year during the open enrollment period to see if you are on the best and most affordable Medicare Supplement and Part D drug plan for you.  Talk to an agent and check the prices of the different plans, taking into consideration your current health problems.  There is a wide variety of plans and premiums available, including both HMO and PPO supplement plans.  Many pharmacies will help you compare different Part D plans to make sure you have one which will cover the largest number of your medications with the lowest possible co-pays.

Finally, you may want to consider switching from traditional Medicare, plus a supplement, plus a drug plan and move to an all-inclusive Medicare Advantage plan, instead. You may want to read my article, "Medicare Supplements vs. Medicare Advantage Plans: What are the Differences?" Medicare Advantage plans must cover everything that is covered under original Medicare, plus many of the same things you would get with a supplement and a drug plan, but with no additional premiums.  Sometimes, Medicare Advantage Plans have a small premium, but typically it is less than $50 a month. In other words, it is like getting an HMO supplement and drug plan for free or at a very low cost. Medicare Advantage plans can save you thousands of dollars a year in premiums.  The disadvantage is that you can only use the doctors and facilities which are part of their plan, except in an emergency.

With a little planning on your part and, hopefully, some help from government legislation and programs, many people have found that they are able to keep their Medicare expenses under control, despite the recent price increases.

Remember to pick up a copy of the cheap book, "10 Costly Medicare Mistakes You Can't Afford to Make," (Ad) to learn how to avoid mistakes and keep your Medicare costs as low as possible. 

Show your support of our country with one of these patriotic t-shirts with the words "America the Beautiful" and a photo of Laguna Beach, California covered in American flags.

You can find these shirts, in red, white or blue backgrounds, and other gifts for retirees and and their families at my Etsy Store, DeborahDianGifts.  Check it out here:

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If you are interested in learning more about financial planning, Social Security, Medicare, where to retire, common medical issues as you age, travel and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional helpful articles.

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Saturday, February 29, 2020

High Healthcare Costs Sink Retirement of Many

If you have paid into Medicare for most of your working years, you may be surprised to learn that after retirement a couple could still spend an estimated $285,000 or more on their out-of-pocket healthcare expenses.   If you are a single man, you should expect to spend approximately $135,000 for future healthcare costs; a single woman could need $150,000, since women tend to live longer.

The amounts mentioned above are what people commonly spend for their Medigap supplement premiums, plus their co-pays, deductibles, dental care, eyeglasses, hearing aides, prescription drugs, over-the-counter medications, and other out-of-pocket expenses from the time they begin Medicare at age 65, until their death. These estimates DO NOT include your basic Medicare premiums or the money you will spend on long-term care at the end of your life, which can become a devastating expense for many families. Most people are not prepared for the high cost of their medical care after they retire.  In fact, because people think their healthcare costs will go down after they are on Medicare, they are often shocked by how much their medical expenses actually are!

In addition to the costs mentioned above, many newly retired seniors are also surprised to discover that they will have to pay monthly premiums for their basic Medicare, and it is likely to be deducted from their Social Security benefits. They will not be getting nearly as much income as they planned. The high cost of healthcare has been known to virtually wipe out the life savings of many retirees.

Even if you believe you have saved plenty of money, paid off your debts, and prepared to cover your living expenses during retirement, you may not have adequately prepared to cover all your future healthcare costs.  In fact, people over the age of 75 spend an estimated 20 percent of their total income on out-of-pocket medical expenses and this amount often grows even faster than their income, according to a 2018 report by Rutledge and Sanzenbacher, which was published by the Center for Retirement Research.

Below are some of the expenses you need to be aware of:

Medicare Premiums

Even though you spent years paying into Medicare, the only part of the program which is free is Part A or hospitalization.  Even then, only 80 percent of hospital costs are covered. You will pay a premium for Part B, which covers your doctor and other health care providers' services, outpatient care, durable medical equipment, home health care, and some preventive services.

In 2020, the Part B premium started at about $144.60 a month. The premium is deducted from the Social Security benefits of most retirees each month.  If the retiree receives a public pension (such as retired teachers and government employees), they may pay an even higher premium directly to the Social Security Administration to cover their Medicare benefits.  High income retirees are also expected to pay a higher Medicare premium.

The Medicare premium rises most years and it is not unusual for the premium increase to entirely wipe out any increase in Social Security benefits.  Consequently, the increases in Medicare premiums often cause people to gradually fall behind inflation, making it even more difficult for them to keep up with other expenses, including their growing medical costs.

If Medicare confuses you, do not be embarrassed.  It confuses most people.  If you are planning to apply soon and want to understand the program better, it may help you to get one of these Medicare books (Ad) which can help clear up your confusion.  There are several good choices and any one of them would be well worth reading, especially if you are new to Medicare.  Most of the books are updated annually.

Medicare Supplements or Medigap Policies

As mentioned above, basic Medicare only covers approximately 80 percent of your medical bills.  Deductibles and co-pays are paid by the retiree.  Because of this, many people buy a Medicare Supplement or Medigap policy to "fill in the gaps."  There are a number of plans available and the cost can add several hundred dollars a month to your monthly bills.  This is in addition to the premium you are required to pay for basic Medicare.

Even if you have a supplement or Medigap plan, it will usually not provide dental benefits, eyeglasses, contact lenses, hearing aids and other common medical necessities.


Prescription drug costs are covered under Medicare Part D, and like Part B, there is an additional premium which you must pay to have a drug plan.  You can get a Part D policy from the same company which provides your Medigap plan, or you can purchase a plan from a different company.  Your pharmacist may help you choose the best plan for you. Like the premium for your basic Medicare Part B, your Part D prescription plan can be deducted from your Social Security benefits and may range from about $12 to $77 a month.  You should also know that most Part D prescription drug plans also require patients to pay a co-pay, or a portion of the cost of their medications.  Without a prescription plan, however, your medications could cost you hundreds of dollars a month, so it is important to have a prescription drug plan.

Hearing and Vision Exams

Half of Americans over the age of 75 have a disabling hearing loss.  Millions of senior citizens have some type of vision loss.  Medicare Parts A, B and D do not cover exams for these health issues; nor do they cover eyeglasses and hearing aids.  Many retirees also have dental problems, and the out-of-pocket expense can run quite high, especially if they need crowns, caps, dentures or implants.   None of this is covered by Medicare.  You may want a separate dental plan to help with some of these expenses ... one more premium to pay.

A Medicare Advantage Part C Plan May Be the Most Affordable Choice

There is one way you may be able to substantially reduce your medical costs during retirement. If you are willing to join an HMO medical network and use doctors and medical facilities which are part of that network, you could save hundreds of dollars a month in Medigap and Part D premiums by signing up for a Medicare Advantage plan.  These plans are also referred to Medicare Part C.

Most Medicare Advantage Part C plans only charge their members the same premium as you would be paying anyway for basic Medicare, or they may charge a small additional fee in the range of $40 to $50, but this is not nearly as much as the cost of a Medigap plan, plus an additional Part D plan and other uncovered medical expenses.

If you decide to choose a Medicare Advantage Part C plan, such as SCAN, Kaiser Permanente, Humana, Aetna or one from another company, the insurance provider is required to provide all the services which basic Medicare covers.  In addition, they often include a prescription plan for no additional premium.  Frequently, the plan also includes a discount on dental work, vision care and/or hearing aids.  However, even if you choose a Medicare Advantage plan, you should still expect to pay some deductibles and co-pays.  In addition, while the policy may give you discounts on vision, dental and hearing care, they will not fully cover those items and you will still be expected to pay large portions of the cost yourself.  Despite these remaining expenses, you will almost always find that a Medicare Advantage plan is much less expensive than basic Medicare, plus a Medigap plan, a drug plan and a dental plan. You could save hundreds of dollars a month.

Personally, my husband and I use the Kaiser Permanente Medicare Advantage plan (called Senior Advantage) and it saves us thousands of dollars a year compared to what we spent early in retirement on basic Medicare, an Anthem Blue Cross Medigap plan, and a drug plan.  We have been very happy with Kaiser.  The downside is that we are limited to Kaiser's in-network doctors and facilities, except in an emergency.  However, when my husband became ill in another state where Kaiser did not have a presence, Kaiser reimbursed us for our expenses.  For us, the savings has been well worth it.

A Health Savings Account Might Also Help Cover Out-of-Pocket Expenses

Another way to deal with the high cost of healthcare after retirement is to prepare years in advance by saving money in a Health Savings Account.  Currently, an individual can contribute $3,000 a year into an HSA and a family can contribute $7000.  People over the age of 55 can save an extra $1,000 a year.  While people can make withdrawals prior to retirement, the money in these accounts can also be invested and allowed to grow until needed after retirement. However, the money can only be used in conjunction with a high-deductible HSA eligible health plan.  This takes some advance planning, but it can be a solution for people who do not want to use a Medicare Advantage plan.

It is recommended that you do your research and work carefully with a medical insurance agent to find the plan which is best suited to your needs.

Long-Term Care is the Big Unknown

Most of the expenses mentioned above, including premiums, deductibles and co-pays, can be estimated fairly well as part of your retirement planning.  However, if you or your spouse needs long-term care at home or in an assisted living or memory care facility as you age, the expense can be disastrous.  Your best bet is to purchase long-term care insurance or a hybrid life insurance policy that includes long-term care coverage.  The other option is to save an extra $300,000 or so in a separate account just for your future care, so you have the money available when you need it.

It is said that the very rich and the very poor do not need long-term care insurance.  This is because the rich can afford to pay for the help they need.  At the other end of the spectrum, those who have a low income and few assets will find that their long-term care might be covered by Medicaid.  Ironically, it is the Middle Class who are the most seriously affected by the cost of long-term care.  If you fall into this group, you need to prepare ahead.  By the time you need long-term care, it is too late to get the insurance.  You need to buy it years in advance.

What are the odds that you or your spouse will need long term care?  For the most part, it depends on how long you live and your medical condition.  It can also make a difference whether or not you live alone.  People who live alone may need care sooner than someone who has a spouse or family member who will care for them during the final years of their life.  People who have chronic health conditions, such as COPD or other lung problems, diabetes, chronic kidney disease, heart disease, a history of strokes, severe osteoporosis, or cancer are more likely to need long-term care.  So are those who live long enough to develop memory problems. At age 80, a person has a 10 percent risk of serious cognitive impairment.  By age 85, the risk jumps to 20 percent.  At age 90, your risk is 40 percent and continues to rise as you age.  Even without other chronic conditions, simply the possibility of getting old can increase your need for long-term care.

Basically, nearly everyone needs to plan for a period when they will need long term care because of age related debilitating health problems which will eventually make it impossible for them to care for their own needs.  Overall, a person who is currently age 65, has a 70 percent chance of eventually needing some type of long-term care services!  Are you prepared?

Are You Prepared for High Healthcare Costs?

The general consensus is that retirees need to be prepared for high medical expenses in the final two or three decades of life.  Depending on their needs, they can prepare by saving enough money in advance, signing up for an affordable Medicare Advantage plan, and/or including long-term care insurance in their plans.

Part of your retirement planning should also include a plan to stay as healthy as you can for as long as possible.  Over and over again, research has shown that the people least likely to need long-term care are those who have taken care of themselves. This means they have eaten a healthy and varied diet, exercised outside in nature regularly, learned to handle stress, managed to sleep seven to nine hours a night, avoided smoking or heavy drinking, and followed the recommendations of their personal physician.

You can get more tips about healthy aging by reading the Blue Zones books.  (Ad) The Blue Zones are places in the world where the residents regularly live long, healthy lives.  However, research has shown that you need to do virtually everything they recommend, not just a couple of their suggestions.  As it is, simply by living in a typical American community, with air pollution, stress, isolation, easy access to frozen meals, and few places to walk, it will be harder for you to get all the same health benefits as people who lived their entire life in a Blue Zone.

The Blue Zone life is one of exuberance. They are people who enjoy delicious food with plenty of herbs, spices and olive oil, eaten often with large groups of friends and family, often accompanied by a glass of red wine.  They are people who encorporate exercise into their normal daily routine, getting outside to enjoy nature in the early morning sunshine and fresh air.  They believe in a bountiful earth. It is a wonderful way to stay healthy and live long.  It is worth a try to follow their lifestyle.  It can also save you a lot of money on healthcare during retirement!

To learn more about Medicare, Social Security, common medical problems as we age, financial planning, where to retire and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional helpful articles.

Disclosure: This blog may contain affiliate links. If you decide to make a purchase from an Amazon ad, I'll make a small commission at no extra cost to you.

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