How much will health care cost in retirement?

Sept. 26, 2013
Planning well will help avoid future problems

Health care costs rank as one of retirees’ biggest financial concerns. But the sooner you plan for this cost, the better you’ll feel about your retirement security. Keep in mind that the chances of those costs being offset by retiree health care insurance grow slimmer each year, as fewer and fewer employers extend health care benefits to retirees.

What will Medicare cover?

One way to manage part of the costs of your retirement health care is to effectively utilize Medicare. As long as you’ve entered the U.S. legally and have been here for at least five years, you’re eligible for Medicare. What’s covered under your Medicare plan depends on which of the Medicare “parts” you have. For more information regarding benefits provided by Medicare, visit

Do you need Medigap insurance?

Medicare – Part A, Part B or both – doesn’t cover the total cost of most medical services or supplies. Given that those out-of-pocket costs could severely affect your lifestyle, you may want to buy a Medigap insurance policy, which is offered by a number of health insurers. As its name implies, Medigap insurance policies are designed to help bridge the gap between your retiree health care costs and your Medicare benefits.

One of the best times to buy a Medigap policy is during the open enrollment period. That period is generally within the first six months of turning age 65, although its definition varies by state. If you apply within open enrollment, there is no medical underwriting, which means you can’t be refused a policy, forced to wait for your coverage, or even charged more because of any health problems.

Although Medigap policies used to cover prescription drugs, no new Medigap policies can cover these costs. You may want to join a Medicare Prescription Drug Plan offered by private companies that are approved by Medicare.

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Will you be prepared for long-term health care needs?

Long-term care expenses are one of the largest unfunded potential liabilities facing today’s retirees and soon-to-be retirees. These types of large expenses could have a significant impact on a retirement portfolio and your ability to create meaningful income for life.

Long-term care insurance could potentially be a solution. Consult an insurance agent who specializes in long-term care insurance for complete details prior to purchasing a policy.

Information provided by Mark Lerner and Ryan Rouille, financial representatives with Capstone Financial, a MassMutual Agency, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual)

© 2013 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001. All rights reserved.