Kitces: Health Care Costs in Retirement

[Gotadimple]

Interesting article by Michael Kitces (with lots of detail and links to underlying studies) about the cost of Health Care in retirement.

https://www.kitces.com/blog/vanguar...osts-in-retirement-projections/#disqus_thread

It turns out that in retirement health care costs are predictable, averaging $5,200 a year, including insurance and out of pocket costs. From the executive summary:
"Yet the reality is that health care costs in retirement aren’t needed as a “lump sum” on the day of retirement, and the Medicare system actually makes health care costs a remarkably stable annual cost that can be planned for. . .

. . . a recent joint study by Vanguard and Mercer Health and Benefits analyzed the typical (and potentially unexpected) costs of health care in retirement, and showed that the “scary” lump sum cost of retiree health care is actually little more than spending a few hundred dollars per month, per person… for the better part of 2-3 decades in retirement, with the average female spending just $5,200/year throughout her retired years including all health care-related costs (albeit excluding long-term care needs)."

 

[audreyh1]

There was a discussion here on this about a month ago? When the article first came out.

Here it is : http://www.early-retirement.org/forums/f38/kitces-on-hc-both-for-fire-and-post-65-a-94280.html

 

[Bamaman]

All I know is that each of the last two years, my wife and I have spent $12K per year on healthcare premiums, deductibles and co-pays. And that's on Medicare with a first class supplement purchased through my ex-Megacorp. That's not chickenfeed, and is expected to run about the same next year with another pending surgery for her.

 

[kimcdougc]

We pay $1656 a month on the ACA for 2018. Paying $1833 per month for two (58 and 61) in 2019.

 

[audreyh1]

We pay $1656 a month on the ACA for 2018. Paying $1833 per month for two (58 and 61) in 2019.

That article is specific to health care costs for retirees aged 65+ - in other words once covered by Medicare.

 

[aja8888]

We have been on Medicare for several years. The costs are similar to what Kites mentions in the article. with us, about $4000/year each for Medicare and The best supplement (full Plan F for DW and Plan G for me).

Our biggest surprise has been Part D, especially for DW who suffer from COPD and now severe osteoporosis (among other things). Her drug costs have been through the roof, averaging $5,000 to $10,000 out of pocket per year in addition to the Part D premium of $85/month and $350 deductible.

If you are not in need of specialized drugs (like me, as an example), you can get by pretty inexpensively with Part D ($400 - $600 year, premiums included).

Just hope you don't need hearing aids or a lot of dental work as Medicare goes silent on those costs.

 

[marko]

Just hope you don't need hearing aids or a lot of dental work as Medicare goes silent on those costs.

I was paying $1200 a month just for myself. Then I got on Medicare.

I figure I'm [-]saving[/-] banking over $900 a month and with that can easily pay for my own hearing aid if I ever needed one.

 

[aja8888]

I was paying $1200 a month just for myself. Then I got on Medicare.

I figure I'm [-]saving[/-] banking over $900 a month and with that can easily pay for my own hearing aid if I ever needed one.

You may need two!

Just hope that your teeth don't fall apart like has happened to some of us "over 65 crowd".

 

[marko]

You may need two!

Just hope that your teeth don't fall apart like has happened to some of us "over 65 crowd".

I hope so too.
But I'm almost 67 now and still have every tooth I was born with (minus wisdoms). Mom, and all four grandparents went into their 90's with just about all their teeth.

Hearing aids on the other hand....I have a 80% hearing loss already (30 years of jet engine noise) but the Drs said a hearing aid wouldn't help. I 'hear' via context they told me, which has sometimes resulted in some very comical responses on my part.

 

[audreyh1]

My teeth and vision aren’t covered under my ACA plan anyway.

 

[marko]

My teeth and vision aren’t covered under my ACA plan anyway.

Now that you mention it, neither did my BCBS when I was paying full freight for it.

 

[broadway]

I just paid out-of-pocket for refraction and new pair of glasses.


The optometrist told me that under most medical plans if the patient had eye glass prescription of sphere of -6 or worse, then it is covered as a medical condition.
I have not verified with BCBSNJ and I wish I had known.



My annual eye exam (non-refraction) has been covered so that may explain it has been covered.

 

[joeea]

"Yet the reality is that health care costs in retirement aren’t needed as a “lump sum” on the day of retirement, and the Medicare system actually makes health care costs a remarkably stable annual cost that can be planned for. . .

Yup.

For folks worried about healthcare costs, Medicare is a pretty good model.

Hopefully, the chatter about government deficits and going after entitlements we were hearing has died down since the mid-term election results.

 

[Offgrid Organic Farmer]

Our healthcare coverage costs us an annual enrollment fee of $400, per visit co-pays of $12, and $9 co-pays for my medications [usually done as 90-day refills].

I am not old enough for Medicare, yet.

 

[MarieIG]

Although I am not yet Medicare age, I did find this to be a good article.

I subscribed to Kitces' blog.

Unfortunately, it is going to my personal e-mail which I almost never remember to read/check. I'll have to work on that.

 

[ShokWaveRider]

I have just signed up for Medicare. Here are my Costs in area code 32080.

Part A & B are $135.5 per month $185 Deductible.
Medicare Supplement Part G is $166.78 per month.
Part D Drug Plan $13.70 per month.

This year's total ACA OOP cost (So Far according to the latest EOB) is $208 for 2018. That includes all the copays coinsurances, deductibles etc. Of course this is after the subsidies.

So for me Medicare works out more expensive. BUT, the coverage and availability is way better than the ACA, even if I do not take advantage of it.

However, the relative predictability of estimating ongoing costs with Medicare is PRICELESS. I am so glad I am not in the general HI marketplace anymore and can afford the best supplement.

Unfortunately not so for DW, the hazards of having a young wife. She is planning on taking SS in 2 years at 62 and we are budgeting ALL of it for her healthcare costs.

 

[aja8888]

I have just signed up for Medicare. Here are my Costs in area code 32080.

Part A & B are $135.5 per month $185 Deductible.
Medicare Supplement Part G is $166.78 per month.
Part D Drug Plan $13.70 per month.

This year's total ACA OOP cost (So Far according to the latest EOB) is $208 for 2018. That includes all the copays coinsurances, deductibles etc. Of course this is after the subsidies.

So for me Medicare works out more expensive. BUT, the coverage and availability is way better than the ACA, even if I do not take advantage of it.

However, the relative predictability of estimating ongoing costs with Medicare is PRICELESS. I am so glad I am not in the general HI marketplace anymore and can afford the best supplement.

Unfortunately not so for DW, the hazards of having a young wife. She is planning on taking SS in 2 years at 62 and we are budgeting ALL of it for her healthcare costs.

Yep! You hit the Medicare lottery and it's like getting the Holy Grail. My DW's Medicare coverage and full Plan F has covered all of about $1,000,000 in hospital/surgery/testing costs in the last 18 months. Plus, we get to pick or specialists! No OOP in that figure.

Keep your DW healthy so she slides into Medicare without costing a bunch.

 

[ShokWaveRider]

Keep your DW healthy so she slides into Medicare without costing a bunch.

Thanks, fortunately she enjoys a lot better health than I do, no Pre-Existing conditions and no drugs. So hopefully she will not have any trouble getting coverage for the foreseeable future.

 

[W2R]

It turns out that in retirement health care costs are predictable, averaging $5,200 a year, including insurance and out of pocket costs.

That article is specific to health care costs for retirees aged 65+ - in other words once covered by Medicare.

[…]Just hope that your teeth don't fall apart like has happened to some of us "over 65 crowd".

+1

With Medicare and retired federal employee insurance to supplement it, my average annual health care costs after age 65 have been $10,003/year. But I have no complaints because much of that is due to dental implants, which aren't covered.

Due to my dental implants I have good, functional, painless teeth. Without those implants (or at least bridges?), my teeth would be in really bad shape.

 

[Rianne]

I'm always reading HC costs $250K throughout retirement. For 30 years, average $8333/yr. or $700/mo. They (various articles, Suzy Orman) always make it sound so drastic. That's in the ballpark for 30 years. We don't have kids, but send 3-4 through college for 4 years, I'm thinking pretty close.


W2R, may I ask what you paid for dental implants? I have 12 crowns that have held up over the years, one from when I was 12 and fell off my bike. Implants vs dentures, implants are superior I understand.

 

[W2R]

W2R, may I ask what you paid for dental implants? I have 12 crowns that have held up over the years, one from when I was 12 and fell off my bike. Implants vs dentures, implants are superior I understand.

They vary tremendously in cost depending on your location. One forum member in California mentioned a very high price, something like $10K or so per implant. Others get them in Mexico for peanuts. As for the US in general, they are less in lower COL areas I guess. Also implants are getting more expensive for me here in New Orleans during the past five years since I got my first one, as my great oral surgeon has raised his fees somewhat. My oral surgeon and dentist work together as a team and they are great, so I'm not shopping around. Anyway each of the ones I got last year cost:

$2250.00 for extraction of the old tooth and implant (done by my oral surgeon)
$1.38 for hydrocodone and an antibiotic
$1500.00 for the crown (done by my dentist)

So, the total was $3751.38 each for these implants. However, they didn't require the bone graft, which was an extra $400 the last time I got one, IIRC. My implants on upper teeth have all required bone grafts, and those on lower teeth haven't because I guess there is more bone there.

My dentist told me that bridges are considerably cheaper than implants, but hey, Blow that Dough... I think the implants are worth the cost so considering how expensive they are, I guess that says a lot.