Getting Ready to Retire? Let’s Talk About Medicare Costs.

When most Americans reach the age of 65, they become eligible for Medicare. For many, this represents a transition from private, employer-based health insurance to insurance through a federal program. Seniors may have questions about the cost differences between their private insurance plans and Medicare or wonder what their Medicare costs will be.

Even though most Americans do not pay a monthly premium for Medicare Part A (hospital coverage) because they paid for it through payroll taxes, there is a deductible that must be paid per benefit period. The other half of Original Medicare - Part B (medical coverage) - comes with a monthly fee that is usually deducted from the person’s social security check. There is also a small deductible associated with Medicare Part B and recipients are typically asked to pay 20% of the cost of services. It is important to understand that both Original Medicare and most Medicare Advantage plans come with out-of-pocket expenses such as deductibles and co-insurance obligations that can change from year to year.


Here’s what your Medicare costs could be when you retire


According to a report* by the Employee Benefit Research Institute shared by CNBC, the cost of Medicare premiums and out-of-pocket prescription drug costs and other fees from the age of 65 onward could be $146,000 for a woman and $130,000 for a man. Unfortunately, more than half of seriously ill patients on Original Medicare struggle to pay their medical expenses.


* The study factored in the expenses associated with Original Medicare, combined with a Plan G Medigap policy plus premium costs for a Part D prescription drug plan and its required out-of-pocket spending.


In general, Medicare only covers about two-thirds of a Medicare recipient’s health care costs but the actual expenses that you will pay for healthcare in retirement can vary widely depending on your income and resources, how often you seek medical care, the prescription drugs that you need and the type of Medicare plan that you choose. Many seniors who choose Original Medicare combine it with a Medigap policy to help cover some of the out-of-pocket expenses that Original Medicare doesn’t cover.