Covering Health Costs in Retirement

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Even with the increased importance of health insurance in 2021, a surprising number of people on Medicare greatly misunderstand the potential health care costs that come with forgoing a health plan. A study conducted at the height of the pandemic last year reported that, on average, most people age 65 and over would need between $130,000 – $146,000 to cover premiums, deductibles and out-of-pocket drug costs without a health plan.

Medicare typically covers about two-thirds of a member’s costs, which leaves them to handle out-of-pocket costs that could potentially reach into six figures. It’s important to identify and discuss the specifics of Medicare with your clients so they know exactly how to best use and plan their coverages for maximum savings.

Many people are selecting $0 premium Medicare Advantage plans to capitalize on the premium savings when they are healthy and first eligible for Medicare. This strategy is increasingly popular for clients that understand they come with ‘narrower’ networks and higher cost sharing. Many agents use the premium savings to advise purchasing accident or hospital indemnity plans to cover higher out-of-pocket expenses.

Medigap plans were designed to fill the ‘gaps’ in original Medicare. Agents should learn the role that indemnity plans also have in filling the ‘gaps’ in Medicare Advantage coverage.

This report demonstrates the important role advisors play in guiding clients’ Medicare choices and education on how to best use their plan.

The Employee Benefit Research Institute states that the predicted savings targets for Medicare beneficiaries to cover health premiums, deductibles, and certain other health expenses in retirement have fallen between 8 and 10 percent since 2019. See the full analysis here.

Take a look at GTL and Aetna senior supplemental Indemnity plans.