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Tips for navigating the basics of Medicare

If you think you only need to save enough money for retirement, think again.

If you think you only need to save enough money for retirement, think again.

While you’re doing everything you can now to be a healthy retiree, you’re still going to have the expected – and the unexpected – medical costs.

In fact, a 65-year-old couple who retired in 2022 will spend an average of $315,000 on health care and medical expenses in retirement, which is 5% higher than what was estimated the previous year.1

Whatever the costs, it’s not going to be an inexpensive undertaking to pay for Medicare, which is your primary health care insurance during your retirement years. Here are some tips on how to include Medicare in your retirement planning.

The ABCs of Medicare

First off, know what Medicare’s different letters mean:

  • Medicare Part A covers hospital visits (i.e., inpatient stays, nursing facilities, hospice, some home health care)
  • Medicare Part B covers doctor’s visits (i.e., certain services, outpatient care, medical supplies, preventive services)
  • Medicare Part D is for prescriptions + many recommended shots and vaccines2

But wait, what about Part C? Medicare Part C (also known as a Medicare Advantage Plan) is a bundled plan that usually includes hospital, doctor, and prescription coverage that is sold through private insurers that contract with Medicare. A Medicare Advantage plan may also include some dental, vision, and hearing coverage as well as discounted fitness programs and transportation to the doctor.3

When does Medicare become available to me?

Most people are first eligible for Medicare Parts A (hospital) and B (medical) when they turn 65 — and sign up then.4

If you’re already claiming Social Security benefits, there is no need for you to sign up since you’ll automatically be enrolled in Medicare. Or you’ll have the option to receive coverage when you get disability benefits from the Social Security Administration or Railroad Retirement Board.4

If you need Medigap, take advantage of the 6-month open enrollment period, which starts the first month you’re enrolled in Medicare Part B and you’re 65 or older. You’ll score better prices and the door won’t close on you to be able to get a Medigap policy.5

How are Medicare premiums paid?

For Part A, for most people, no additional premium is paid.6 For Part B, the premium is paid through an automatic deduction from Social Security benefits.7 And for Parts C and D, how you pay varies based on the kind of private insurance you have.

How much will Medicare cost me?

It all depends. Just know that health care costs could be your biggest expense post-retirement.

Typically, Medicare covers two-thirds of health care costs, and you’re left with about 12% of out-of-pocket costs.1

For a preview of what your costs could be, go to, enter your zip code and select a plan. Then, consider your health history (and your family’s), what your future finances will be, and other factors that could affect your money in retirement.

And remember that Medicare doesn’t cover routine dental, vision, hearing conditions or long-term care. You’ll need a separate insurance plan if you don’t want to pay for these medical expenses out-of-pocket. And, oftentimes, you might still need to pay deductibles and copayments on services covered by Medicare.

Does my retirement income impact how much I pay for Medicare?

Yes. Your modified adjusted gross income (or MAGI) determines the amount you pay for Medicare Part B premiums. For example, if you make $97,000 as an individual taxpayer or $194,000 as a married couple filing jointly, expect to pay $164.90 a month for the “standard” 2023 Part B rate. As your income rises so do your premiums. Individuals with a MAGI of at least $500,000 and couples with a MAGI of at least $750,000 can expect to pay a premium of $560.50 a month.8

Medicare Part D premiums depend on the plan you choose as well as your income. If you make more than $97,000 per year, you’ll pay an $12.20 (IRMAA) each month in addition to your premium. In 2023, the national base beneficiary premium for Medicare Part D is $32.74.9

Those with limited income may qualify to get assistance in paying their Medicare premiums.9

Do I need to save for healthcare expenses when planning for retirement?

Yes, you should do what you can now to help plan for your costs — both for Medicare and out-of-pocket expenses.

According to a recent AARP report, many retirees with traditional Medicare spend about 31% of their Social Security income on health care expenses.10 It’s projected that national health spending will increase by an average of 5.4% every year — from now until 2028, when it’s expected to reach $6.2 trillion. So health care expenses will become a larger and larger portion of retirement spending over time.11

Health savings accounts

If you are still working and enrolled in a high-deductible health plan, you may want to consider contributing to a health savings account (HSA), which offers attractive tax benefits . An HSA has a three-part tax advantage — contributions are pretax or tax-deductible, grow tax-free, and can be withdrawn without being taxed when used on qualified health care expenses.12

Individuals can contribute up to $3,850 a year and families can contribute up to $7,750 a year. People over 55 years old can contribute an extra $1,000 to their HSAs each year. A sidenote: You can use the money for nonmedical expenses without taking the 20% withdrawal penalty that exists prior to age 65. You would be responsible for the taxes on the withdrawals, similar to a traditional IRA or 401(k). 12

Once you enroll in Medicare, you are no longer allowed to contribute to an HSA, but you can continue to use your HSA funds to pay for medical expenses — including Medicare premiums, copays, and deductibles — until they’re exhausted.13

Long-term care insurance

Americans who reach the age of 65 will likely need some form of long-term care as they grow older. While family members might be able to provide some care, nearly 50% of older adults will need to get paid assistance.14

Long-term care (LTC) insurance provides services (such as nursing home care, adult day health care, etc.) that Medicare doesn’t cover. To qualify, you likely will need to apply for coverage while in good health. So make it something you consider when planning for your retirement.

But you don’t want to get it too early so as to not be paying for premiums way longer than necessary. Women aged 55 will pay on average $2,675 a year for LTC coverage and men aged 55 will pay on average $1,700.15

Can I do anything now to make paying for Medicare later any easier?

See Health Savings Accounts (HSA). You can also make healthy choices now to increase your chances of aging well and helping to mitigate extra health expenses down the road. It will help you feel better now — especially with all this talk about Medicare costs — and potentially in the long run.

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1. Dhue, Stephanie; Epperson, Sharon. “Americans can expect to pay a lot more for medical care in retirement,”, May 16, 2022.

2. “What’s Medicare?”, January 2023

3. “How Do Medicare Advantage Plans Work?”, January 2023

4. “When Can I Sign Up for Medicare?”, January 2023

5. “When Can I Buy Medigap?”, January 2023

6. “Costs”, January 2023 

7. “How to Pay Part A & Part B Premiums”, January 2023

8. “Does My Income Affect My Monthly Premiums for Medicare?”, September 27, 2022.

9. Behring, S. “What Are the Medicare Income Limits in 2023?”, November 16, 2022.

10. Bieber, Christy. “Average Retirees Spend More Than 30% of Social Security on this 1 Expense,”, February 4, 2022.

11. NHE Fact Sheet,, January 2023

12. Backman, Maurie. “Fidelity: Average couple will spend over $300,000 on health care after retirement,”, May 19, 2022.

13. Behring, S. “Can You Have a Health Savings Account (HSA) and Medicare?”, June 28, 2021.

14. Painter, Kim. “Understanding Long-Term Care Insurance,”, October 13, 2021.

15. Rivelli, Elizabeth. “How to Find the Best Long-Term Care Insurance,”, November 14, 2022.


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