12 Tips for a Healthy Retirement and Making the Most of Medicare
1. Understand Your Medicare Options
Once you turn 65, you need to make choices about your Medicare coverage. Will you choose:
- Medicare Parts A and B (original Medicare)
- Original Medicare with a Medigap policy only
- Original Medicare with a Drug Plan only
- Original Medicare with Medigap AND a Drug Plan
- Medicare Advantage plan with drug coverage
NOTE: If you are still working when you become eligible for Medicare, then you will want to discuss with your employer how to handle Medicare. This will depend on the size of your employer, the type of coverage you have and more…
The best option for you will depend on your health needs, where you live and the level of premium you are willing to pay.
2. Estimate Your Lifetime Out of Pocket Medicare Costs and Compare Coverage Types
Planning retirement is difficult. You need to predict all kinds of costs for the rest of your life. And, out of pocket Medicare costs are a huge factor. Having Medicare does not mean that medical coverage is free. To the contrary, you will likely have significant premiums, co pays and out of pocket maximums to fund.
Knowing what you will likely need to spend on healthcare can make retirement planning easier.
3. Use Tools to Tell You if Your Procedure is Covered
Medicare.gov has a lot of information that can help you. One big question people often have is whether something is covered by the insurance or not. And, oddly enough, different procedures are only covered in specific areas of the country.
Use this link to find out if your medical test, item or service is covered by Medicare.
4. Find Out What an Outpatient Procedure Will Cost
It is one thing to know if the procedure is covered, but the other important question is what will it actually cost you. (Covered does not usually mean free.)
If you are planning an outpatient procedure, Medicare.gov can tell you the national average cost of that procedure.
5. Find Medicare Covered Doctors, Specialists, Hospitals, Nursing Homes, Dialysis Facilities and More…
Sometimes it can be difficult to locate providers that take Medicare.
Medicare.gov can help with that. They have search tools to help you locate and compare Medicare approved: doctors and specialists, nursing homes and home health agencies (although it is important to note that nursing care is usually only covered for a short period of time), hospitals (including star ratings and more), dialysis facilities, inpatient rehabilitation facilities and more…
6. Be Warned that Medicare is in Bad Financial Shape
A lot has been written about Social Security going bankrupt. The news is worse though for Medicare.
The trustees say that Medicare’s hospital insurance fund (funded mainly through payroll taxes) will be depleted in 2026.
Without changes, the trustees say that the share of benefits that can be paid from revenues will decline to 78% in 2039 and then rise again to 85% in 2092.
Learn more about the financial problems with Social Security and Medicare.
7. Plan for Healthcare Cost Inflation Being Higher than General Inflation
The Centers for Medicare and Medicaid Services (CMS) predict that out of pocket Medicare spending will grow at a rate of 5 percent annually.
For the record, 5 percent is a lot! It is a full 3 percentage points higher than the current general inflation rates which are hovering around 2 percent.
And, the fact that healthcare is a retiree’s second biggest expense means that this is an important factor to consider!
The NewRetirement Planner allows you to set your medical cost inflation rate at a different level than general inflation. Doing this can really improve the reliability of your projections.
8. Improve Your Health to Spend Less on Healthcare
You probably know the basics: eat right, don’t smoke and exercise! And, you probably get that reducing stress is a big factor for good health. But, have you considered how taking care of your health can also save you money? The healthier you are, the less you will spend on doctors and procedures!
9. Enrollment Deadlines
Medicare enrollment begins three months before your 65th birthday and continues for seven months.
Enroll in Medicare when you’re first eligible. Even if you have other health coverage, you should probably sign up for Medicare when you’re first eligible to avoid penalties and coverage gaps
Sometimes, people still have health insurance through their employer (or their spouse’s employer) at age 65. If you’re in the same situation, you may be able to delay your Medicare enrollment. However, be careful. You will need to sign up within eight months of losing the employer coverage. If you don’t, you will likely face a penalty, and you might even have to wait until the next enrollment period.
10. Review Your Coverage Yearly! (October Through Early December)
You can choose to switch your Medicare coverage during the annual enrollment period (October 15 – December 7).
Plans change and your health needs will change. To make sure you are getting the greatest value and have the right coverage for your particular health needs, it is worth reevaluating your plan options.
Here are 10 tips for getting great coverage.
11. Watch Your Retirement Income Levels to Avoid Paying Surcharges on Parts B and D
Medicare recipients who have income in excess of $85,000 for individuals and $170,000 for married couples are required to pay an income-related monthly adjustment amount surcharge, known as IRMAA, in addition to their regular monthly Medicare premiums. The IRMAA surcharges apply to both Medicare Part B (part of original Medicare — which almost everyone has) and Medicare Part D (the prescription drug plans).
It may be possible for you to avoid these surcharges and save thousands each year if you pay attention to the income thresholds and lower your income when possible.
You might want to talk to a financial planner about ways to shelter your income through charitable giving, how you take IRA and 401k distributions, managing capital gains and losses, etc…
You can review your annual income levels with the NewRetirement Planner.
12. Take Advantage of Semi Secret Perks
Original Medicare gives you access to some great perks:
Preventative Visit: During your first year in Medicare Part B, you can get a comprehensive exam that will give you a full review of your health, get you up to date on screenings and shots and set a plan for good health.
Annual Wellness Visit: You get a free wellness check up every year. You can get many health screenings done at this time.
Depression Screening: Depression is common among older adults. In fact, one of six people over 65 suffers from depression. A depression screening can help identify treatment options if you are in need.
Help to Stop Smoking: Smoking is one of the greatest predictors of high health costs, health complications and an early death. If you smoke now, Medicare has programs to help you stop.
Obesity Counseling: One out of three Medicare beneficiaries are estimated to be obese. However, Medicare can help you learn about ways to reduce your weight and improve your overall health.