As most people turn 60, they start thinking about preparing for retirement and Medicare. Specifically, how much money healthcare, in general, will cost them in retirement.
I’ve mentioned in a previous blog, we see that people are deciding to work longer and delay retirement due to fear of having to be on Medicare. But people don’t realize that Medicare isn’t scary and can provide you better coverage and have lower costs than insurance you’ve had in the past.
Today, I want to cover how you can also lower Medicare costs once you join.
Most people once they retire, are on a fixed income, and they want their money to stretch as far as possible. One way you can reduce your Medicare costs is to pay for Medicare based on your income.
If you have a higher income, so above $88,000 as an individual, or above $176,000 as a couple, you will pay more for Medicare Part B and Medicare Part D. These additional fees are called IRMAA penalties (Income Related Monthly Adjustment Amount).
Medicare looks at your income from two years ago. So, if you’ve retired and your income has dropped, you can ask Medicare to review your financial situation to get rid of those additional income penalties. There are also other life-changing circumstances that will allow to you appeal.
Now at the other end, if you have a significantly low income, you might qualify for Medicaid, and if you think you may be eligible, talk to a local Medicaid office to see what you might qualify for. There can be extra programs to apply to lower or cover all of your Medicare costs.
The second way to lower your Medicare costs is to be sure that you’re looking at ALL of the expenses associated with Medicare.
A mistake I see people make is they just look at the Medicare plan’s premium and pick the lowest premium, assuming it’ll save them money.
The reality is unless you are never going to see a doctor and never take medications, you’re likely to pay more in the long run for one of those plans with a cheap or $0 premium.
For that reason, I highly recommend that you look at all the actual costs that you could be paying if you were to have health issues.
Look at the co-pays, deductibles, maximum out-of-pocket expenses, and all of those “fine print” details that will go into your overall Medicare and health care costs.
We’re all paying for our health care one way or another, whether it’s the premiums in the front end or through the co-pays and the out-of-pocket on the back end.
My advice is to be thoughtful around how you look at costs because by only looking at premiums, you could be missing some high costs, which could cost you more money in the long run.
