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Tips for navigating the basics of Medicare in retirement

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 healthy 65-year-old couple that has a life expectancy of 87 years is projected to pay $321,994 in premiums for Medicare Parts B and D, supplemental insurance and dental insurance.1

Other estimates indicate a couple will need $280,000 (up 2 percent from $275,000 in 2017) to cover health care costs during their retirement years. And for individuals, it’s expected to be around $133,000 for men and $147,000 for women.2

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
  • Medicare Part B entails doctor visits
  • Medicare Part D is for prescriptions

But wait, what about Part C? Medicare Part C (also known as Medicare Advantage plans) is all-in-one coverage (hospital, doctor, and prescription coverage) that is sold through private insurers that contract with Medicare. It may also include dental and vision coverage.3

Now that we have that covered…

When does Medicare become available to me?

You’re automatically enrolled in Medicare Parts A and B at the age of 65, if you’re already earning Social Security.4 Or you’ll have the option to receive it when you get disability benefits from the Social Security Administration or Railroad Retirement Board.

Perhaps you’re eligible for Medicare Parts A and B, but need supplemental insurance for costs not covered by “original Medicare” (i.e., dental, vision, hearing aids, eye glasses, long-term care, and private-duty nursing).

There is a six month initial open enrollment period for Medigap coverage that starts the month you turn 65.5

How are Medicare premiums paid?

For Part A, no additional premium is paid. For Part B, the premium is paid through a reduction in Social Security benefits. And for Parts C and D, it all depends on the kind of private insurance you have.6

How much will Medicare cost me?

It all depends. Just know that health care costs could be your biggest expense post-retirement. 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.3

And remember that Medicare doesn’t cover 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.7

Do I need to save for Medicare when planning for retirement?

Yes, you should do what you can now to help plan for your costs due to Medicare.

According to a recent report, health care expenses are expected to increase by 5.5 percent every year, which is triple the inflation rate from 2012 to 2016. In 10 years, a retired couple will need up to 92 percent of their Social Security benefits to help cover health care costs.7

Consider contributing to a health savings account (HSA), which has a triple tax advantage — meaning that contributions are pretax or tax-deductible, grow tax-free, and can be withdrawn without being taxed when used on qualified medical expenses and premiums. And any unspent funds roll over to the next year.2

Long-term care insurance provides services (such as nursing home care) that Medicare doesn’t cover. To qualify, you likely will need to purchase while in good health. So make it something you consider when planning for your retirement.7

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

You can also make healthy choices now to increase your chances of aging well and helping to mitigate extra health expenses down the road.8 It will help you feel better now – especially with all this talk about Medicare costs – and potentially in the long run.

Are there any unexpected taxes related to paying for Medicare?

Your modified adjusted gross income (which includes capital gains, Social Security, required minimum distributions from IRAs and 401(k)s, and more) determines the amount you pay for Medicare Part B premiums. 

This information should not be considered as tax or legal advice. Clients should consult their tax or legal advisor regarding their own tax or legal situation. 


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1. HealthView Services, 2017 Retirement Healthcare Costs Data Report. Assumes premiums for Medicare Parts B, D and supplemental coverage. Assumes life expectancy of 87 years.

2. Grant, Kelli B., Epperson, Sharon. “Here’s how to plan for higher health-care costs in retirement,”, April 28, 2018. (Figures includes premiums, cost-sharing provisions and out-of-pocket costs associated with Medicare parts A, B, and D. But the figures do not include other health expenses such as over-the-counter medications, most dental services and long-term care, and do not factor in any employer-provided retiree health coverage.)

3. Cross, Jory. “Plan Medicare Health Costs for Retirement,”, September 16, 2018. 

4. Getting started with Medicare,, 2018.

5. When can I buy Medigap?,, 2018.

6. What Medicare covers,, 2018.

7. Schnaubelt, Catherine. “Planning for the High Cost of Healthcare in Retirement,”, June 6, 2018.


DOFU 1-2019