Average Health Care Costs in Retirement

[Tekward]

"Fidelity Investments ... released a study saying that an average 65-year-old couple retiring in 2012 would need to have saved up $240,000 to pay for out-of-pocket health-care costs in retirement."

Also in the article: Dan Keady, the director of financial planning for TIAA-CREF, recommends people planning for retirement budget a line item of $5,000 per year per person for out-of-pocket health-care costs.

Health-Care Bill in Retirement: $240,000 - Yahoo! Finance

I am curious about the amount that others have planned for these costs.

 

[imoldernu]

Exclusive Dental and Optical, our costs @age 77 are just about on that $5K/person figure.

 

[donheff]

$10K Sounds about right. I think we are about $5K for the both of us for direct health care costs plus about $4K for high end LTC. If we didn't have the LTC policy I would be setting aside the more than a $4K/year generating fund for potential out of pocket LTC costs.

 

[nun]

I'd budget for the premiums and the out of pocket annual max. So through the MA Connector (health exchange) for a single, 52 year old male that's $10k for a bronze plan with a $5k out of pocket max. For a gold plan with no deductible or out of pocket max that could be $8k, but that's obviously all premiums, if I retire at 55 I can keep my current insurance and the cost will be $1.5k, finally, if I move to the UK it will be $0.

 

[W2R]

It looks like my medical spending in 2012 will be about $3200. This represents only the cost of federal retirees' BCBS Standard insurance plus costs for my regular prescriptions for BP, cholesterol, etc., and routine lab tests and doctor visits associated with those prescriptions. So, I'd think this would be a minimum cost since I would expect it to be more if I had any unusual health issues or if I had to get medical insurance on my own.

Next year, my medical spending will go up to at least $4400 even if nothing goes up in price, because I will have Medicare Part B to pay for and my insurance cost does not go down.

 

[Mulligan]

I'm not a 65 year old retiree, but allowing for my HSA tax break, and including dental, after 3 years of retirement, my average yearly health costs are about $250 a year. Have a very cheap grandfathered individual plan with $5500 deductible. Before I retired, I made sure I could financially handle a 10k cost a year in case something bad happened which fortunately so far nothing has. I worry about healthcare costs, but as of now it's by far the cheapest expense I have.

 

[mickeyd]

need to have saved up $240,000 to pay for out-of-pocket health-care costs in retirement."

Been retired for a few years and our total monthly healthcare cost for DW and I is about $120. We are covered by Medicare/TFL (me~ about $100/month) and Tricare Prime (DW~ about $20/month).

We have no deductibles or co-pays.

I guess we will need to be spending our stash on other things.

 

[pb4uski]

We are about 7200 a year for health ins plus deductibles, so about 10k total. For the two of us.

 

[Brett_Cameron]

I budget $15k/year for insurance and out of pocket costs. This includes medical, dental and vision insurance. This year actuals are about $17k. We hit the $10k max out of pocket in Oct this year instead of the normal time of Dec. because of DW's 2 week stay in hospital with pneumonia in Oct.
This is for 4 of us. Insurance premiums include subsidized retiree HDP and Medicare Part B (disabled DW only).

I contribute the max to my HSA and use that as much as possible for OOP expenses.

 

[dmdunca44]

Over the last 5 years, our health care expenses (including eye, dental and LTCi premiums) have averaged $6300/yr for both of us. (We are in our mid 60's).

On a monthly basis, I budget our premiums and enough to meet DH's deductible ($1500).

I guess we are fortunate - so far. Knocking on wood.

 

[youbet]

$10K Sounds about right.

Yeah, that's pretty close for us too. Medicare Part B + Part D + Supplement is the biggest chunk. Then health club dues, deductibles, non-presecription meds, new eye glasses, dental, blaaah, blaaah, blaaah, and before your know it, $10k or more.

In fact, 2012 will go cruising past $10k since I cracked a tooth and required peridontal work with an implant, crown, etc.

A note to folks reading the thread....... Be sure to note that the personal costs being stated by many don't include the value of med insurance or services being paid for them by others such as a past employer.. Unless you also have someone else to pick up the tab for you, your costs will be higher, probably much higher, than these folks are stating.

 

[Lazarus]

My present costs are $5100 a year for my wife and I for medical and dental subsidized by my former employer.

 

[Midpack]

I am curious about the amount that others have planned for these costs.

Of course it will vary. Medicare age/eligible vs not (yet), this is an ER site. And folks here range from highly subsidized retiree health care to no retiree health care at all, and everything in between. The difference between a 55 yo with no corporate/government retiree health care plan vs a 70 yo with Medicare and a highly subsidized retiree health care plan would be night and day...

 

[obgyn65]

I have planned only an overall budget for each year in retirement, about $85K to $100k per year until 95. I do not have any breakdown amount for my own health-related needs.

I am curious about the amount that others have planned for these costs.

 

[obgyn65]

I should also add that, as discussed in other threads, I just bought an LTCI a few weeks ago. I think the maximum total lifetime benefit is $1,000,000. I just don't know if this amount should be taken into consideration as part of retirement health care budget or not (and if so, how).

 

[bentley]

Health ins for DW and I is $850/mo, and will go up on Jan 1. This is half the actual premium, as megacorp pays the other half. Great insurance with low deductibles, and copays. I'm just frightened that monthly premiums will skyrocket. I have 5 years until Medicare, so I expect to be paying ~ $1200/mo by age 65 or more. This is a potential budget buster.

DW is 23 years post breast cancer, and I have prostate cancer, so LTC is unobtainable. Otherwise life is good.

B

 

[rbmrtn]

Health ins for DW and I is $850/mo, and will go up on Jan 1. This is half the actual premium, as megacorp pays the other half. Great insurance with low deductibles, and copays. I'm just frightened that monthly premiums will skyrocket. I have 5 years until Medicare, so I expect to be paying ~ $1200/mo by age 65 or more. This is a potential budget buster.

DW is 23 years post breast cancer, and I have prostate cancer, so LTC is unobtainable. Otherwise life is good.

B

Wouldn't you see some saving in 2014 when PPACA kicks in ?

 

[fritz]

"Fidelity Investments ... released a study saying that an average 65-year-old couple retiring in 2012 would need to have saved up $240,000 to pay for out-of-pocket health-care costs in retirement."

Also in the article: Dan Keady, the director of financial planning for TIAA-CREF, recommends people planning for retirement budget a line item of $5,000 per year per person for out-of-pocket health-care costs.

Health-Care Bill in Retirement: $240,000 - Yahoo! Finance

I am curious about the amount that others have planned for these costs.

This retirement healthcare cost figure has been going around for some time now (even here)

http://www.early-retirement.org/forums/newreply.php?do=newreply&p=1250359 (although the yahoo article link no longer works).

The 2012 median retirement savings (total savings) of those 55-64 is half ($120,000) of what they say you need just for healthcare in the article. They do suggest LTC insurance as an option to cover these costs in your linked article - hmm...........

Another Yahoo article gets even bleaker about retirement savings (you've gotta love Yahoo) -

America

Thought it was worth pointing out that reported healthcare costs compared to reported retirement savings leads to uncertainty at best.

We retired early 59/57. Healthcare costs for the both of us - BCBS high deductable plans (HSA $5,000) and out of pockets runs about $8,000.00/yr. Just got notice of plans going up almost 12% next year. And FYI - turning 60 gets you a special kick in costs for your health coverage (Happy Birthday!). Costs would be higher for me if I didn't have the VA. Permanent exclusion of coverage from BCBS for my thyroid condition (hypothyroid discovered by the VA) and any related illinesses leaves the govt. the only coverage I can get for it.

We came to the conclusion that it's near impossible for most retirees to cover all healthcare possibilities (buy enough insurance) to avoid unforseen medical catastrophes in retirement (see link to retirement savings). Feel this is also true for everyone else - age and/or personal situation doesn't matter. We are fortunate to have funds to self insure for the if/when scenarios mentioned in the article, but really wonder how folks are supposed to manage it when they don't even have enough total retirement savings to cover reported projected retirement healthcare costs (great article).....

 

[nun]

Throwing out numbers like $240k is pretty useless, except that it gives a good headline. Such reports would be much more useful if they took the approach that's been common in the answers so far; presenting the cost as monthly or annual premiums and out of pocket expenses. Budgeting for annual expenses of $10k is far easier to comprehend and plan for that being presented with the $240k total number. But it does point out that Medicare won't cover you for everything and the staggering problems with a system that requires taxation while you work and then also requires you to pay even more when you retire. Most other countries provide full coverage for their population at a fraction of the cost.

Of course if you are low income you won't have to pay anything like $240k as there are subsidies available, but the problem comes for those with middle incomes and savings who have to pay full premiums. I'm lucky enough to have several health care options, and many on this forum are able to ER because of their access to subsidized health care, unfortunately most Americans don't have that advantage.

 

[bentley]

Wouldn't you see some saving in 2014 when PPACA kicks in ?

I'm not sure how, but would be very interested in the possibility.

PPACA does not compare in coverage to what we have now. Also, there is no subsidy available when income reaches a certain level based on tax return data. I think the subsidy ends at aprox $65k income for a couple.

However I have not studied the ppaca.

I would hate to give up my current insurance. One of my concerns is that megacorp may drop the retiree HI, and force us to the unsubsidized ppaca. All megacorp benefit fine print says they have the right to modify, or cancel any and all benefits at any time of their choosing. When their HR/board of directors gets to the point where they don't care what employees/retirees think of them, that possibility exists. Many corps are approaching that point...ESP when they can blame it on the govt.

We will see.

B

 

[lark_L]

Not retired yet, but I'm using $1500/mo or $18k/yr in my planning spreadsheet. My company retirement medical is ~$1000/mo now. We probably haven't lost it because the retirees pay nearly the entire premium. Hopefully, Medicare will still be around and the $1500 will drop WAY off at 65.

 

[Free_at_49]

Does Medicare in the US cover everything after 65?

My friends over 65 tell me that Medicare covers 80% but at US healthcare costs the 20% can bankrupt you. But then they tell me that in practice they're never paid anything out-of-pocket. I'm trying to decide if I can afford healthcare the US or just go back home to Canada.

 

[pb4uski]

I'm guardian for my great aunt and take care of her finances. She has a Medicare supplement insurance policy that costs her about $200 a month. Between that and Medicare, she doesn't pay a thing.

She might have to in certain situations, be even with a couple hospital visits earlier this year she hasn't had to pay a thing.

 

[dmdunca44]

Does Medicare in the US cover everything after 65?

My friends over 65 tell me that Medicare covers 80% but at US healthcare costs the 20% can bankrupt you. But then they tell me that in practice they're never paid anything out-of-pocket. I'm trying to decide if I can afford healthcare the US or just go back home to Canada.

My own personal experience is that Medicare never pays the full amount the dr charges. But most of the time, my dr accepts the Medicare payment and does not send the balance to my supplementary ins.

My supplementary ins has a high deductible so I have yet to ever reach it. I have it because it is very cheap, covers drugs, and is there should I ever incur really expensive bills.

 

[nun]

I'm guardian for my great aunt and take care of her finances. She has a Medicare supplement insurance policy that costs her about $200 a month. Between that and Medicare, she doesn't pay a thing.

She might have to in certain situations, be even with a couple hospital visits earlier this year she hasn't had to pay a thing.

So that would be about $300 in premiums including Medicare Part B. Most people will have some extra out of pocket expenses as well. For most retirees in other countries those costs seem outrageously high. I also have an issue with the ridiculous complexity of US retiree health insurance. There are so many bits and pieces and options that I'm sure very few people undestand what's covered.