Updated on May 07 2019
Healthcare is one of the most expensive parts of retirement and experts believe that medical costs will continue to rise. Unlike previous generations who often had access to employer- or union-sponsored retiree health benefits, today’s generation of seniors most likely need to cover healthcare expenses on their own and should have a large sum set aside to cover medical bills in retirement.
Learn more about the rising costs of healthcare and how you can save on medical bills in retirement.
The future of healthcare is being shaped by a Big Tech invasion - Data Driven Investor
Last decade has seen a massive digital disruption across all sectors of the global economy and the Health sector is now…
Rising Medical Costs in Retirement
According to the Fidelity Retiree Health Care Cost Estimate, the average retired couple at the age of 65 should have $285,000 set aside to cover healthcare expenses in retirement. This estimate does not cover all healthcare costs and does not include long-term care, which most seniors will need at some point in retirement. As people continue to live longer and healthcare inflation outpaces the rate of general inflation today’s retirees need to have a plan for covering healthcare costs in retirement. Additionally, the average retirement age is 62 in America, three years before Americans are eligible for Medicare.
Steve Feinschreiber, senior vice president of the Financial Solutions Group at Fidelity cautions, “Healthcare is creating a ‘retirement cost gap’ for many pre-retirees. Many people assume Medicare will cover all your healthcare costs in retirement, but it doesn’t. We estimate that about 15% of the average retiree’s annual expenses will be used for healthcare-related expenses, including Medicare premiums and out-of-pocket expenses. So, you should carefully weigh all options.”
5 Ways to Save on Medical Bills
The average hospital stay in the United States costs approximately $10,700 and seniors are often admitted to the hospital for more expensive health conditions. Here are five ways to save on medical bills before and after a hospitalization.
1. Examine your insurance plan.
Your insurance company should be able to provide you with written information on what is and is not covered under your insurance plan policy. Ask about coverage of specific medical procedures and hospitalizations as well as what percentage you will be responsible for covering out of pocket. This can help you plan for any anticipated hospitalizations and plan accordingly. Consider whether you may need to shop around for long-term care insurance.
2. Talk to more than one healthcare provider.
Be sure to get quotes from more than one provider who can do the procedure. You can even research costs online from third-party health organizations. Organizations like Health Grades and The Leapfrog Group can approximate costs for medical services so that you go into your procedure fully aware of your options.
3. Ask for your bill to be itemized.
Medical facilities are required to give you an Explanation of Benefits (EOB) with your medical bill. However, they are not required to give you an itemized bill of services incurred. Ask for one to see exactly what you are being billed for. This will identify any errors in billing and allow you to fix those immediately before leaving the hospital.
4. Ask about any discounts.
Do not be shy about asking for any discounts. Some medical facilities give discounts for cash payments, for making payments over the phone, or for paying in one large lump sum. These are often unadvertised but can be substantial so do not hesitate to ask.
5. Consider generic alternatives.
Talk to your medical provider about using generic prescription drugs instead of more costly name-brand drugs. Usually, generic drugs can be subbed and they are often just as effective and less costly, leading to significant savings. You could also ask your doctor if there is an effective over-the-counter alternative to avoid high prescription drug costs.
Receiving your medical bill should not be the most stressful part of your hospital stay. If you are concerned about covering healthcare costs in retirement, connect with a fiduciary financial advisor who can help you create a strategic and effective financial plan that will cover healthcare costs in retirement.
Originally published at https://seniorfinanceadvisor.com.