Retirement can be an exciting period of life, but it can also be a stressful one from a financial standpoint. That’s because healthcare can become a huge burden for seniors, and the cost of healthcare can easily exceed the amount seniors budget for.
Part of that boils down to certain Medicare misconceptions. Many seniors begin getting coverage through Medicare upon turning 65, which is when eligibility starts. But it’s important to understand some of the costs you might be looking at under Medicare. Here are some essential details about the program to commit to memory well before your retirement arrives.
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1. It won’t pay for everything
Medicare Part A covers hospital care, while Part B covers outpatient services and preventive care. You’ll also need a Part D drug plan, which you enroll in separately.
Medicare might cover a lot of the healthcare services you need. But it won’t pay for everything. Dental treatment and eye exams are generally excluded from coverage, as are hearing aids.
It’s important to know what services Medicare won’t pick up the tab for ahead of retirement. That way, you can plan accordingly by padding your IRA, 401(k), or health savings account (HSA).
2. Hospital stays can be costly
The good news about Medicare Part A is that most enrollees are not charged a monthly premium for coverage. In contrast, you’ll pay a premium for Parts B and D.
But while you may not have to pay for Part A coverage, that doesn’t mean hospital stays are free. In 2023, enrollees are subject to a $1,600 deductible per hospital stay. And if a stay extends beyond 60 days, the cost is $400 a day for the next 30-day period. Beyond that, the cost per day rises even more.
It’s a good idea to have supplemental insurance on top of your Medicare coverage. That insurance could help pick up the tab for some of the costs you might otherwise have to pay out of pocket.
3. It won’t cover long-term care
Medicare is designed to pay for treatments and services that are medical in nature. So if you take a fall and need physical therapy afterward, that will generally be covered. Similarly, if you need an aide at home while you’re recuperating from an injury, that may be considered a covered expense, too.
But one thing Medicare definitely will not pay for is long-term care. If, as you age, you wind up needing a home health aide to assist with everyday living, or you wind up needing to move to an assisted living facility, the cost there will be on you. And it could be astronomical.
That’s why it could be a good idea to put long-term care insurance in place ahead of retirement. These policies can help defray the otherwise tremendous cost of long-term care.
There’s a lot to learn about Medicare, since the program is loaded with rules. But do yourself a favor and get the scoop on Medicare before your retirement rolls around. That way, you can plan accordingly for the costs you might be looking at.
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