Three Big Medical Costs That Retirees Often Underestimate
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Americans tend to go into retirement in relatively good health and well aware they will pay premiums for such things as Medicare, supplemental Medicare insurance and Medicare drug plans and even long-term-care insurance. One widely used estimate for such healthcare costs—from financial-services titan Fidelity—pegs them at $330,000 for the average couple throughout retirement, or $165,000 for an individual, and those figures don’t include long-term-care insurance.
But as individuals get farther into retirement, many will face extra costs that recur year after year—and aren’t accounted for in most planning scenarios. All told, these unanticipated costs can add tens of thousands of dollars, or more, to the healthcare tab in retirement.
Uncovered drugs
A new federal requirement for Medicare drug insurance, known as Part D Medicare, says that people using Medicare drug plans won’t have to pay more than $2,000 out of pocket for the drugs covered by their drug insurance each year. But there is a catch. The $2,000 cap applies only to drugs that a Medicare Part D insurance or Medicare Advantage company tells patients up front each year will be covered through what’s known as the “formulary list.”
Consider the drug Imbruvica, which treats blood cancer. It recently ran $14,900 a month and Medicare negotiated a reduction to $9,000. If a Medicare patient has a drug plan that has Imbruvica on its formulary list, he or she won’t have to pay more than $2,000 for it during the year. But if Imbruvica isn’t on a patient’s Part D plan formulary list, the $2,000 cap on Medicare drugs won’t apply and the patient could face a monthly cost of $9,000 The key to avoiding such costs, says Cubanski, is to check formulary lists for expensive drugs before selecting a Medicare drug insurance plan each year
Medical isolation
In isolated, rural areas such as much of Alaska, people realize that even routine medical care is likely to depend on air travel to cities, so it is a way of life to budget for small private planes and multinight hotel stays. Yet in other areas of the country, people pick dream homes away from the bustle of urban life early in retirement and then are shocked when health issues crop up later and travel costs mount. When picking a retirement location, McClanahan says, “You have to decide whether lifestyle or the best medical care matters most to you.”
Concierge care
In some areas of the country with large affluent retiree populations, doctors increasingly are turning away patients on Medicare and accepting new patients only if they pay an annual fee for concierge medicine. So retirees can feel as if they have little alternative than to pay thousands of dollars a year for the security of a reliable doctor. The average annual concierge retainer runs $3,500 a year, And as more doctors in a community become concierge, there are fewer doctors left who take Medicare or other insurance
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