As you near retirement, you’re probably anticipating all the things you’ll do with your time. But to fully enjoy this next phase of your life, you’ll need to get a firm grip on your finances – including planning for health care costs.

Many people's greatest financial worry in retirement is the cost of health care, including long-term care, according to the Edward Jones/Age Wave survey.  Health care will likely be one of your largest expenses in retirement – we estimate about $10,000-$12,000 per year for a couple. Best way to prepare? Have a plan.

As you plan, knowing what to expect from Medicare once you turn 65 is key.

Here are your options:

Traditional Medicare – Traditional Medicare is offered through the federal government and includes Part A, which provides hospital coverage, and Part B, which covers doctor appointments. Part B charges a monthly premium, which, in 2021, is $148.50 for most people. Part A is generally premium free since you (or your spouse) likely paid Medicare taxes while working.   

There are some notable "gaps" in Medicare, so you can add additional "parts" offered through Medicare-approved insurance companies.  These include:

  • Part D covers prescription drugs for a modest premium or none at all, as well as out-of-pocket costs for the prescriptions, which would vary depending on your plan.    
  • Medicare Supplement insurance (Medigap) has several different plan options and may cover items like copays, deductibles and coinsurance (the percentage of health services you pay after you’ve reached your deductible). Medigap premiums vary by provider.

Medicare Advantage (Medicare Part C) -  A Medicare Advantage plan includes Part A and Part B, and possibly Part D. You might pay a low monthly premium for Medicare Advantage or no premium, but you will have deductibles, copayments and coinsurance.

Notably, you cannot have Part C and Medigap – you either have Traditional Medicare, Part D and Medigap or Medicare Advantage. So, it's important to consider the plan offering the best combination of costs and coverage that meets your needs.   

Keep this in mind:  Neither Medicare nor Medicare Advantage will cover the highest-cost items of long-term care, such as an extended stay in a nursing home. You may want to explore private long-term care insurance.

Health care expenses during retirement can be a challenge – but by planning for them now, you can avoid unpleasant surprises and stay in control of your financial future.

Important Information:

Edward Jones is a licensed insurance provider in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Agency of Massachusetts, L.L.C.