How To Get Health Insurance In Retirement

Another important aspect of retirement planning is figuring out your plan for health insurance. Healthcare can be one of the biggest retirement expenses out there, especially as you get older. According to the 2023 Fidelity Retiree Healthcare Cost Estimate, a single person age 65 may need $157,500 saved up after taxes to cover healthcare expenses in retirement. And for couples, that figure increases to $315,000. And keep in mind, that Fidelity estimate does not include prescriptions, dental, or long-term care either. Failing to plan ahead for medical costs in retirement can be an absolute disaster, and it's unfortunately quite common. Most people should expect to lose access to their employer's health insurance plan after they retire. However, Merrill Lynch found that 21% of large firms extend healthcare coverage to retirees, so it's definitely worth looking into. Now, Medicare is a federal health insurance for those 65 and older. If you plan on retiring after turning 65, you can transition right over to Medicare. However, if you plan on retiring earlier than 65, you will need to have a plan for getting health insurance coverage until you turn 65. A few options for this include the health insurance marketplace as well as health savings accounts. If you use the health insurance marketplace, you're going to have to buy a plan, and that should be factored into your overall retirement expenses. It's also important to consider whether or not you plan on pursuing Medicare Part B and Medicare Part D or other supplemental coverage. Medicare Part A is free for most people as long as they paid Medicare taxes for at least 10 years while working. But Part A only covers hospital stays and procedures. If you want to have coverage for other medical costs and prescription drugs, you will need to add the optional Medicare Part B and Part D. Medicare Part B covers doctor's visits as well as outpatient treatments, and Medicare Part D covers prescription drug costs. But keep in mind, for all of this, there is going to be a deductible that you have to pay first, and only Medicare Part A is free. If you plan on adding Part B, Part D, or other supplemental coverage, each one will have an additional monthly cost, and these costs will have to be factored into your monthly retirement expenses. In addition, Medicare does not cover long-term care or most dental-related expenses. So you may want to consider purchasing a standalone dental insurance policy in addition to a long-term care plan. As I'm sure you can imagine, these insurance costs add up quickly, which is why healthcare is such a big cost during retirement.