Guessing at Medicare Costs in 2035

[MercyMe]

I'm in the process of re-evaluating my own guess as to what amount I should budget for spending in 2035 for Medicare when I and my spouse turn 65.

A recent T Rowe price article suggests that a 90th percentile cost for Medicare parts A,B, and D as well as Medigap and out of pocket expenses is currently $11,500 per individual. So that's $23k per couple.

Now if I run that number out for 13 years with let's say 5% inflation (healthcare inflation that is) then looks like we'll be paying $41,500 annually.

Am I even remotely close as to how this would be estimated?

 

[ivinsfan]

I'm in the process of re-evaluating my own guess as to what amount I should budget for spending in 2035 for Medicare when I and my spouse turn 65.

A recent T Rowe price article suggests that a 90th percentile cost for Medicare parts A,B, and D as well as Medigap and out of pocket expenses is currently $11,500 per individual. So that's $23k per couple.

Now if I run that number out for 13 years with let's say 5% inflation (healthcare inflation that is) then looks like we'll be paying $41,500 annually.

Am I even remotely close as to how this would be estimated?

TRowe is full of you know what with that number. MY DH and I have top of the line coverage including all the things you mention and pay less then the 11500 for both of us. It's a moving target except for the part B and D and what you choose for Medigap.BTW part A is free with Medicare.



Sorry I know that probably doesn't help you much..for a placeholder number that far in the future I don't know what number you should use.

 

[rk911]

why not determine the avg annual % increase in Part B premiums for the past X-years, add an inflation factor and apply that going forward? as for us... we have trad. medicare wirh a BC/BS supplement and a BC/BS Part D drug plan (silver). in 2021 we spent just under $11k for all of that. i pay for my dental out-of-pocket, wife has insurance through her retirememt system. total dental last year was $340.

 

[TheWizard]

I pay around $500 a month for Medicare parts B and D now, for myself only.
Let's assume it goes up 10% per year.
So 13 years from now, I'll be paying $1730 per month, ruffly.

Does that seem about right?

 

[Koolau]

Heh, heh, being 75 does have its advantages. I don't worry a lot about 2035 though my "plan" does extend to 2046. But seriously, I don't think we can project much about MC in 2035. That's at least 6 election cycles away. Depending on how many of us senior voters are still around, it's likely things will change a lot - especially around the health care system in general and MC specifically - but YMMV.

 

[Turbo29]

As the Part A fund will be exhuasted in ~4yr and the Social Security Trust Fund will be exhausted in ~11yr, it is very likely that there may be a lot of changes coming to both programs. This makes it difficult to predict costs in 2035.

 

[SecondCor521]

It's really anyone's guess.

It depends on two things: (a) how much Medicare premiums increase for medical costs, and (b) your Medicare MAGI in 2033, because that is what will impact your IRMAA for 2035 and thus impact your overall Medicare premiums for Parts B and D. Oh, and (c) whether or not you get a Medigap, and (d) whether or not you're on traditional Medicare or choose Medicare Advantage.

For (a), my spreadsheet assumes a 7.7% increase. I think that's because that is the 2021 to 2022 increase. I think historically that was on the high end, because of the new Alzheimer's drug that might have been approved and used by a lot of Medicare folks. I read an article the other day saying that Medicare premiums for 2023 might even decrease because the Alzheimer's drug isn't going to be a thing for whatever reason.

For (b), I can guess sort of well on my 2023 Medicare MAGI, but that in turn depends on my RMD plans, ACA, a possible inheritance and other things. Based on my current plan, I'll be in the IRMAA base tier that year. But based on your situation and plans, it could be different for you.

As part of (b), if you think you'll be subject to IRMAA, you also have to predict what the IRMAA bracket inflation rates will be over that period. I just use a CPI guess of 3%.

I don't plan on a Medigap plan personally, and I'm not sure about Medicare Advantage but right now I think not.

The end result of all that is a guess of $5,314 a year for me for B and D in 2035.

 

[Helen]

I hadn't paid attention to the cost of Medicare A+B plus all the additions until recently. I feel bad for anyone trying to live on Social Security. I always thought Medicare was cheap.

 

[marko]

I hadn't paid attention to the cost of Medicare A+B plus all the additions until recently. I feel bad for anyone trying to live on Social Security. I always thought Medicare was cheap.

DW has another year to go before Medicare. She currently pays about $14,000 a year with a $3,000 (I think) deductible.

My Medicare B, D and supplement costs me about $2800 a year total, so, yeah, I'd say Medicare is cheap, and in many ways, better than what DW is paying big money for.

As far as the OP, a lot can happen, change and evolve over the next 13 years; any projections are pure speculation IMO. In our fast changing world today, 13 years may as well be 50 years from now for all we can predict.

 

[Digger1000]

I'm 56 and retired 5 years. I pay $0 for health insurance thru ACA. I will have to get rich by 65 I guess.

 

[Car-Guy]

Pretty sure mine will be zero by 2035... Hopefully, YMMV.

 

[G-Man]

I'm 56 and retired 5 years. I pay $0 for health insurance thru ACA. I will have to get rich by 65 I guess.

How is it 0? Just curious.

 

[braumeister]

According to TMF:
Part B monthly premiums have risen by an average of 7.7% per year since 1966 but there are a number of considerations, not least of which is IRMAA.

 

[Dash man]

I'm in the process of re-evaluating my own guess as to what amount I should budget for spending in 2035 for Medicare when I and my spouse turn 65.

A recent T Rowe price article suggests that a 90th percentile cost for Medicare parts A,B, and D as well as Medigap and out of pocket expenses is currently $11,500 per individual. So that's $23k per couple.

Now if I run that number out for 13 years with let's say 5% inflation (healthcare inflation that is) then looks like we'll be paying $41,500 annually.

Am I even remotely close as to how this would be estimated?

The two of us pay $19,891.68 for Parts A, B, Plan N supplements and Part D Aetna plans (I have a $70/mo no deductible plane) and are in the top IRMAA tier this year because of large Roth conversions during the March 2020 market slump.

Other than paying for a higher cost Plan G, we pretty much pay as much as anyone can in my zip code. T Rowe Price is out to lunch!!!

 

[Digger1000]

How is it 0? Just curious.

My income is low enough. Where I live an income of 30k gets you a $0 premium. Some areas of the country your income can be even higher for $0 premium.

https://www.healthcare.gov/see-plans/#/

p.s. I have everything I want or need for way less than 30k a year.

 

[G-Man]

My income is low enough. Where I live an income of 30k gets you a $0 premium. Some areas of the country your income can be even higher for $0 premium.

https://www.healthcare.gov/see-plans/#/

p.s. I have everything I want or need for way less than 30k a year.

More power to you for living on $30K a year. I wish I could do that.

 

[Koolau]

My income is low enough. Where I live an income of 30k gets you a $0 premium. Some areas of the country your income can be even higher for $0 premium.

https://www.healthcare.gov/see-plans/#/

p.s. I have everything I want or need for way less than 30k a year.

Heh, heh, that's just about my Paradise Premium. YMMV

 

[Digger1000]

More power to you for living on $30K a year. I wish I could do that.

I've been living on less than 14k a year for 3 of the 5 years I've been retired. I have never hit 17k. I am living the same way I always lived pre retirement. Will probably go up to 20k with inflation lol. The 2 years that were over 14k were because I moved one year and had hernia surgery another year. I traveled 365 miles to have the hernia surgery since I have a 8k deductible/max out of pocket and the total for everything including motel and $60 in tolls came to $2400. My total spending that year was under 16k.

It helps to keep spending down since I pay $0 state and federal income tax. Well this year I had to pay for the 1st time to federal, $21.00 since a little of my dividends were not qualified. But I figured out how to not have to pay that $21, I will just covert $500 less a year to a Roth. I've been converting over 14k a year since I retired, and still paid no tax.

I do not own my own home. I rent in a big city. And I am not a cord cutter.

 

[Koolau]

I've been living on less than 14k a year for 3 of the 5 years I've been retired. I have never hit 17k. I am living the same way I always lived pre retirement. Will probably go up to 20k with inflation lol. The 2 years that were over 14k were because I moved one year and had hernia surgery another year. I traveled 365 miles to have the hernia surgery since I have a 8k deductible/max out of pocket and the total for everything including motel and $60 in tolls came to $2400. My total spending that year was under 16k.
It helps to keep spending down since I pay $0 state and federal income tax. Well this year I had to pay for the 1st time to federal, $21.00 since a little of my dividends were not qualified. But I figured out how to not have to pay that $21, I will just covert $500 less a year to a Roth. I've been converting over 14k a year since I retired, and still paid no tax.

I do not own my own home. I rent in a big city. And I am not a cord cutter.

Wow, Inquiring minds want to know (okay nosy know-it-alls want to know) how you do it. Anything you'd care to share about your spending would be, well, interesting.

 

[SecondCor521]

Wow, Inquiring minds want to know (okay nosy know-it-alls want to know) how you do it. Anything you'd care to share about your spending would be, well, interesting.

Not the person you asked, but I'm at a bit under $16K all in for the past six months actual excluding my kids' college expenses (paid from a separate college fund), which would be a run rate of about $32K.

And that's with "fluff" in my budget. It looks like my annual bare bones nothing but the bare necessities budget would be about $24K.

And that all is with my eldest son living with me during that entire time, and my other two kids living with me the past month or so.

Paid off house in suburban Boise and a paid off old car. Electricity is a lot cheaper here than leeward Oahu also.

Happy to answer specific questions if anyone is interested.

 

[Koolau]

Electricity is a lot cheaper here than leeward Oahu also.

You got that right. I'm guessing our electricity is almost as expensive as in California.

 

[Al in Ohio]

The two of us pay $19,891.68 for Parts A, B, Plan N supplements and Part D Aetna plans (I have a $70/mo no deductible plane) and are in the top IRMAA tier this year because of large Roth conversions during the March 2020 market slump.

Other than paying for a higher cost Plan G, we pretty much pay as much as anyone can in my zip code. T Rowe Price is out to lunch!!!

Your quoted costs are closer to TRowe Price than anyone else. Only 10% difference. How can you think they’re “out to lunch?”

 

[Digger1000]

Wow, Inquiring minds want to know (okay nosy know-it-alls want to know) how you do it. Anything you'd care to share about your spending would be, well, interesting.

Nothing interesting. The only time I've had food from a restaurant since 2017 was in 2019 when I was out of state on the road and I picked up 3 $1 burgers at BK. I bought my couch in 1985. My kitchen table, BR desk, and BR dresser are hand me downs from my parents circa 1960s or earlier. My recliner is from my parents, I think they bought it around 1990. I've bought 1 car since 1989. I've never had a credit card. I love not spending money. Its my favorite thing to do. I would go crazy living any differently.

Oh yeah. I dont have any kids.

 

[Koolau]

Nothing interesting. The only time I've had food from a restaurant since 2017 was in 2019 when I was out of state on the road and I picked up 3 $1 burgers at BK. I bought my couch in 1985. My kitchen table, BR desk, and BR dresser are hand me downs from my parents circa 1960s or earlier. My recliner is from my parents, I think they bought it around 1990. I've bought 1 car since 1989. I've never had a credit card. I love not spending money. Its my favorite thing to do. I would go crazy living any differently.

Oh yeah. I dont have any kids.

Thanks. Very illuminating and potentially valuable to folks wanting to reach FIRE more quickly. I think I live very frugally (nothing but used cars, used furniture, turning off the lights, etc. etc.) but my spending is quite a bit higher. Of course, part of that is living in a HCOL area. It's not a problem to me as it was in the "plan." Still, it's nice to hear that true LBYM living is possible without deprivation. Aloha

 

[Dash man]

Your quoted costs are closer to TRowe Price than anyone else. Only 10% difference. How can you think they’re “out to lunch?”

Because we are in the top IRMAA tier. They didn’t indicate their number was at the top of a range.