Saving for health insurance after retirement can pose several challenges for individuals. The need for specialized care, treatment for age-related illnesses, preventative therapies, and even coverage for accidents are just some of the reasons why health care is so expensive for aging seniors. While some will depend on Medicare coverage after the age of 65, there are still hidden costs that can take a financial toll on the retirement plans of seniors.
According to the Employee Benefit Research Institute, the average American couple can expect to pay around $266,589 for insurance premiums, and an additional $128,365 for other healthcare costs such as copays, dental, vision, and other out-of-pocket expenses during retirement. There are ways, however, to save on out-of-pocket healthcare costs such as copays, prescription drug costs, and insurance premiums not covered by Medicare.
Health Savings Account (HSA)
A health savings account (HSA) is a tax-free medical savings account that could help you save on healthcare costs after your retirement. This type of plan can be arranged before retirement and Medicare and is designated to cover dental, vision, and copays. An HSA cannot be used to pay healthcare premiums, but can be used for high deducible health plans that count as Minimal Essential Coverage. You can make an annual contribution to an HSA of up to $3,350 as an individual, or $6,750 as a family, and seniors over the age of 65 can contribute an additional $1,000. While the contribution limits are subject to change every year, an HSA after retirement offers benefits and savings such as:
• A tax bracket that is lower by up to 10%
• Eligibility for more tax credits
• Tax-free payments for out-of-pocket healthcare costs
• Can be withdrawn without any penalty if you are over the age of 65
Long-Term Care Insurance
Purchasing a long-term care insurance plan before retirement can help prepare you for out-of-pocket costs associated with assisted living, home healthcare, and nursing home care. The average yearly cost of nursing home care not covered by Medicare can reach upwards of up to $87,600. Purchasing a long-term care insurance plan while in good health is essential to accessing a more affordable plan. The estimated cost for a long-term care insurance plan for a 60-year-old couple is around $2,270, although these rates vary depending on location, age, and current health. Among some of the benefits of long-term care insurance is the ability to adjust daily benefit levels according to individual needs. There are also hybrid insurance plans that help family members benefit from the plan, even if the long-tem care coverage is used or not.
Investing in these types of plans can significantly lower healthcare expenses during retirement. You should consider your health condition, age, and need for care to help choose an adequate plan. While it may seem like an unnecessary cost now, planning ahead could help you fulfill your retirement vision without the risk of health events impacting lifelong savings. In addition to these plans, here at HelpRx we offer discounts on 1,000s of medications openly available to anyone in the U.S. for free. Search our site for discounts off of your medication.