Plan for and
manage healthcare costs

 
Get up to speed on what Medicare costs, what it will cover and how much you'll need to pay on your own.

Medicare won't cover everything

Most Americans age 60 and over spend an average of one-third of their income on health-care expenses.1 These costs can put pressure on a retirement income stream, even without a serious illness.
Read:
How Americans age 60+
spend their money1
Cost of Education
In a nutshell, your main
decision is whether to
choose Traditional
Medicare or
a Medicare
Advantage Plan

Know your Medicare ABCs (and Ds)

To plan for your healthcare costs, it's helpful to understand how Medicare works (costs and choices vary by state). Medicare is made up of several plans, usually referred to as "parts." In a nutshell, your main decision is whether to choose Traditional Medicare or a Medicare Advantage Plan:

Traditional Medicare (Parts A and B)

Part A helps pay for hospitalization, and is usually provided free because it was covered by your payroll taxes (although you'll pay a deductible).

Part B is optional (you'll pay a monthly premium) and helps to pay for medical services like doctor visits and including common health screenings.

You can choose your own doctors with both plans.

Medicare Advantage Plans (Part C)

These Medicare-approved plans, which are offered by private insurance companies, are alternatives to Traditional Medicare.

They're similar to HMOs in that you see the plan's doctors, and the plans often cover prescription drugs.

Part D

These Medicare-approved private plans cover prescription drugs for people enrolled in Parts A and/or B.

Read:

Build healthcare costs into your budget

With Medicare typically covering only 60% of medical expenses, it's a good idea to make room in your retirement budget for out-of-pocket costs.
Once you've determined which Medicare coverage is right for you, project your annual costs and work that number into your budget. Even if you're in good health today, it's a good idea to plan ahead.
Average annual out-of-pocket
health-care costs after
Medicare2
Cost of Education
Covering the costs of
long-term care3
Cost of Education

Set aside funds for long-term care

The U.S. Department of Health and Human Services estimates that 70% of people turning 65 or older will need long-term care services during their lifetimes.4
When you develop your retirement drawdown strategy, consider including the costs of long-term care. At an average cost of over $75,000 a year, nursing homes are one of the biggest threats to the financial security of retirees.
It's easy to see why more and more people are considering long-term care (LTC) insurance. This type of insurance can be a good way to help keep long-term care costs from consuming your retirement savings, since standard health insurance coverage doesn't include long-term care.
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1 Longer Lives, Changing Life Cycles: Exploring Consumer and Worker Implications, Credit Suisse Economics Research, July 2011.

2 Source: Estimates provided by HealthView based on historical insurance data and actuarial projections, June 2011. Assumes Medigap Plan C and individual in moderate health. Includes insurance premiums, deductibles and co-pays, plus out-of-pocket expenses for uncovered prescription costs and vision, dental and hearing care.

3 Source: Genworth 2012 Cost of Care Survey

4 Source: U.S. Department of Health & Human Services, LongTermCare.gov. Accessed October 31, 2016.

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.

Long-term care insurance coverage contains benefits, exclusions, limitations, eligibility requirements and specific terms and conditions under which the insurance coverage may be continued in force or discontinued. Not all insurance policies and types of coverage may be available in your state.

All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. They are not backed by Merrill Lynch or its affiliates, nor do Merrill Lynch or its affiliates make any representations or guarantees regarding the claims-paying ability of the issuing insurance company.

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