Even with Medicare, the Cost of Health Care Can Be Shocking
Episode 353 - People might think that health care is cheaper once you’re covered by Medicare. Maybe, but the cost of health care in retirement is higher than many people think. A recent study by Fidelity gives us some real numbers.
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Transcript of Podcast Episode 353
Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, even with Medicare, the cost of health care can be shocking.
Many people, even before they reach the age of 65, are concerned about how much they will have to pay for health care. The average cost of health insurance is approximately $7,000 a year if you use an Affordable Care Act marketplace plan.
[1] Keep in mind that the cost of insurance can vary significantly based on the type of coverage, deductible, insured age, family size and ages, local cost of living and insurer availability, and whether you’re a smoker.
But many people also believe that there’s hope for the future. After all, when they get to 65, and are more likely to really need health care, Medicare steps in. And Medicare is “free,” yes?
It is true that if you qualify for Medicare when you reach age 65, as most people do, it is free to enroll in Part A, which is the Hospital Insurance portion. But Part A doesn’t cover everything.
[2] For one thing, there are co-pays and deductibles that aren’t covered. That’s why some people opt for Medicare supplement plans, which require premium payments.
Even worse, there are other forms for Medicare, Part B for doctor’s visits and Part D for prescription drugs, which have additional premiums: up to $628.90 per month for Part B and up to $85.80 per month for Part D in 2025.
[3] These maximums apply to people with modified adjusted gross income of over $500,000 (single) or $750,000 (married filing jointly).
And even still, Medicare doesn’t cover long-term care, most dental, hearing and vision care or cosmetic procedures.
[4]
Then there’s Medicare Advantage plans, also known as Part C. These plans have become popular because of their advertised low premiums and extra benefits, sometimes even including vision and dental coverage. These plans are not run by Medicare itself but by private insurance companies, and are often treated as an alternative to “original Medicare,” which is parts A and B.
But there are drawbacks. There can be high out-of-pocket costs, restrictions on doctors or hospitals you can use, and limited coverage for travelers. Also, rates and plans are subject to change every year.
[5]
So, either way, health care still costs a lot of money, even after you enroll in Medicare. A recent study by Fidelity gives us some concrete figures. According to the study,
