According to Go Banking Rates report, managing healthcare bills becomes very important as retirement approaches because they are hard to plan for and cost a lot. A new study from the Employee Benefit Research Institute says that a couple aged 65 might need $383,000 to cover 90% of their medical bills. In the past, retirees had perks paid for by their employers, but today’s seniors might not, so planning is very important. Americans are living longer and spending more on health care, so before they quit, they should think about these five ways to get the most out of their health insurance.
How to Plan for Retirement. (PHOTO: Investopedia)
HEALTH INSURANCE
As retirement gets closer, health insurance needs to be a top priority. The author of Arnie, Eliza Arnold, suggests a thoughtful way to think about decisions. People who retire before Medicare starts must find another way to get benefits. You can stay on your employer’s plan through COBRA, join the public marketplace for the Affordable Care Act through special registration, or stay on your spouse’s plan if they work. Fed aid changes based on income. Retirees need to be careful because their health benefits as retirees affect their ability to get a rate tax credit, and taking money out of their IRA or 401(k) lowers their eligibility for a rebate.
MEDICARE EMPLOYMENT
To escape fines, you must plan ahead for signing up for Medicare at age 65. If you don’t sign up for Medicare Part B during the first registration time, your rates will go up 10% every year, unless you have insurance through your job.
Part A of Medicare covers hospital stays (for free, with a deductible),
Part B covers doctor visits (for a monthly fee and a deductible),
Part C covers Medicare Advantage.
Part D covers prescription drugs (for a fee based on your income). To go along with Parts A and B, Medigap rates change by location and health. Medicare rates are based on modified adjusted gross income and may go down if you sign up for Parts A, B, and D early or if your income goes down. IRAs and other post-tax retirement accounts lower the amount of income that is taxed when you leave. Knowing what Medicare covers and how much it costs can help you plan your healthcare in retirement.
DELAY OF SOCIAL SECURITY
If you claim Social Security later in life, your monthly payments might go up. Putting off retirement and getting Social Security increases your monthly income until you turn 62. Not everyone can wait, but those who can might be able to retire with more money. Get a different health insurance plan until Medicare starts if you retire before age 65. Smartly using Social Security could make retirement safer and more enjoyable.
HEALTH SAVINGS ACCOUNT
A Health Savings Account (HSA) could be good for workers who have approved health insurance. HSAs let people use savings they made before taxes, let them grow tax-free, and let them take money out tax-free for certain medical bills. Some examples of these types of costs are Medicare payments, long-term care, drugs, and hospital stays. You can use your HSA money for things other than medical costs after age 65 without being charged a fee, but regular payments for purchases are taxed. With a yearly contribution cap of $4,150 ($8,300 for families) in 2024 and a $1,000 catch-up contribution for those over 55, HSAs let people build up their savings over time and invest in the stock market for faster growth. Putting money into an HSA while you’re working helps you pay for medical bills in retirement while minimizing your tax burden.
PURCHASING INSURANCE
It’s pricey to get long-term care insurance, but seniors should do it. This insurance covers the daily costs of nursing homes, special care, assisted living, and home support. For the most part, Medicare does not pay for this service. A study done in 2020 said that 70% of adults would need long-term care, which in a private nursing home could cost $108,000 a year. The annual costs of the insurance are cheaper if you sign up early, which makes it more affordable. The rates may go up by about 50% if you sign up between the ages of 55 and 65.
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