Before you can address these costs, it's important to understand what Medicare and other insurance cover.
We can help you do just that – so you can make the decisions that are right for you. In general, you’ll have two types of medical expenses when you retire: traditional and long-term.
Medicare is designed to cover traditional expenses, such as doctor’s visits, prescriptions, in-hospital expenses and wellness exams. However, you’ll still need to budget $4,000 to $6,000 a year to cover out-of-pocket costs Medicare doesn’t pick up – including premiums and deductibles as well as any supplemental insurance.
Below is a quick overview of Medicare Parts A and B costs and coverage.
Standard Medical Components
Covered Expenses
Estimated Out-of-Pocket Cost (2014)*
Hospital Insurance
Covers medically necessary inpatient hospital care (including rooms, meals, general nursing and drugs), skilled nursing facility care, some nursing home care (if following an inpatient hospital stay) and hospice care.
Average monthly premium: $0 1
Benefit-period deductible: (days 1-60): $1,216 2
Medicare premiums, deductible, coinsurance and co-payments
Routine dental care and dentures
Routine hearing exams, fittings for hearing aids and hearing aids
Routine eye exams, glasses and contact lenses (unless after cataract surgery)
Medical Insurance
Annual deductible: $147
Premiums vary based on participant's income
Responsible for co-payments/coinsurance (For example, coinsurance may include paying 20% of all outpatient hospital services.)
*Source: Medicare, Kaiser Family Foundation, Edward Jones estimates.
Of all the expenses Medicare doesn’t cover, long-term care is potentially the biggest. This type of care includes nursing homes, assisted living, in-home health care and adult day care. Costs vary according to the type and amount of care, but the price tag can add up: Using an average nursing home stay of 2.5 years, you’d need more than $200,000 in today’s dollars to cover this cost – and that doesn’t include the effects of inflation.
You can pay for long-term care by adding these costs to your budget or insuring against them. If you decide to pay for them out of pocket, your Edward Jones financial advisor can look at your entire financial picture and help you determine if your portfolio can withstand this potential cost.
Another option is to purchase some form of long-term care insurance. The policies and costs can vary dramatically, however, based on your age, health and gender, as well as the amount of coverage you desire.
Your Edward Jones financial advisor can help you evaluate the following:
Health care costs are important, but they are also just one of many factors to consider when you look at your retirement picture. That's where your Edward Jones financial advisor comes in. By getting to know you and your whole financial picture, he or she can work with you on a personalized strategy to fit your needs.
Your Edward Jones financial advisor can look at your entire financial picture and help you determine what solution may be right for you.
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1 You must have paid 40 quarters of Medicare tax while employed. If you paid less than 40 quarters, you may pay a monthly premium of up to $426.
2 A benefit period begins when you're admitted and ends when you have not received inpatient or skilled nursing facility services for 60 straight days, at which point a new benefit period (and therefore a potential deductible) begins.
3 If you delay filing or refuse Part B when you become eligible, there could be a 10% premium surcharge for each year you are eligible but not enrolled.
4 Average monthly premium based on single taxable income of $85,000 or less or joint taxable income of $170,000 or less. For income above these levels, premiums will be higher.
Visit the federal Medicare websitefor more information or to determine if specific items are covered.
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