Plan now for the cost
of health care

 
Discover the steps you can take today to prepare for your health care costs in retirement—even if that's 10 or 20 years away.

Understand and budget for health care costs

Your retirement savings plan should take health expenses into account. Use your current budget to help you project future expenses, although you'll need to factor in higher health-care costs and the cost of long-term care.
Contrary to popular belief, Medicare on average only covers about half of all health-care expenses. It doesn't pay for deductibles and co-pays, for example, or prescription drugs you take on a regular basis.
Medicare also doesn't cover long-term care if you have an illness that prevents you from taking care of yourself. That's where long-term care insurance can help. Because premiums are based on age at the time of purchase, the younger you are when you purchase a policy, the less expensive it typically will be.
Read:
Projected out-of-pocket health care costs for a 65-year-old Medicare beneficiary1
Projected health care costs through 2035

Don't let medical expenses eat into your progress

Unanticipated medical expenses can derail years of retirement preparation, but you can prepare for health costs that may arise unexpectedly:
  • If you have a medical condition that's likely to persist when you get older, get a better understanding of what your medications should cost so you can make a more informed comparison among available drug plans.
  • Add to your emergency fund to cover unexpected medical expenses.
  • Consider funding a health savings account (HSA) on your own or at work, if your employer offers one. If you have a high-deductible health plan (HDHP), an HSA can help you save for current medical expenses and healthcare costs in retirement. Qualified distributions will be federally and possibly state tax-free. Any unused balance carries over from one year to the next.2
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Make sure you're insured

Faced with higher insurance premiums and age-related medical issues, people between the ages of 50 and 65 face the highest out-of-pocket healthcare costs of any age group. That's why it's never been more important to have health coverage:

Take advantage of your employer-sponsored health plan: If you can get coverage through your workplace, you'll likely pay lower premiums than if you buy your own policy.

Keep up your health insurance payments: Have your premium deducted from your paycheck or set up automatic payments.

Explore your options: If you need health coverage, see what plans are available through your state or the federal government through the Affordable Care Act.

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Take Action:
The 50-65 age group faces
the highest out-of-pocket
healthcare costs
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1 Data provided by HealthView using historical insurance claim data and actuarial projections, June 2011. Assumes moderate health.

2 Neither Merrill Edge nor its Financial Advisors provide tax, accounting or legal advice. Please consult your own independent advisor about any tax, accounting or legal questions you may have.

This material should be regarded as general information on healthcare considerations and is not intended to provide specific healthcare advice. If you have questions regarding your particular situation, please contact your legal or tax advisor.

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