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Planning Medicare for Women

Planning Medicare for Women

June 06, 2020

If you're like most people, you know what a headache it is to pay for health care. Even if you have private insurance through an employer, there are all sorts of things to worry about: premiums, deductibles, whether your insurance will pay for a specialist, etc. But that's nothing compared to the headache of paying for health care after retirement. 

Thankfully, for the millions of Americans age 65 and older, there's Medicare. I say "thankfully" not because Medicare is perfect. It isn't. But it is an important safety net ... especially for women.

Here are a few facts may not know: 

  • 56% of individuals with Medicare are women as of 2010.
  • That number rises to 62% for individuals over 80.
  • Women on Medicare spend, on average, $4,490 every year in out-of-pocket costs for health care coverage. While that's still a significant number, Medicare beneficiaries are "far less likely to spend more than 10% of their incomes on health care costs" compared to those with individual coverage. In addition, individuals on Medicare are thought to "experience fewer medical-related financial problems than those on private insurance." 

Medicare is especially important for women for a few very simple reasons. One, women live longer than men on average, so they will need access to affordable health care for longer. Second, there is some evidence to suggest women deal with more chronic conditions than men. Finally, because the average woman still earns less than the average man, single, divorced, or widowed women need to work harder at securing a stable income in retirement in order to meet their needs and expenses. 

That means getting out of Medicare. To do that, it's important to plan for Medicare ... and for your health care costs in general. 

The fact of the matter is that health care planning is a critical step toward both financial independence and a solid retirement. There's no use being anything less than blunt about it. Your medical expenses will go up the older you get. But many women fail to plan for these costs. It's a major mistake too many women make. 

Those that do plan, often underestimate exactly how much their medical expenses will cost. For example, a 2013 study by Fidelity Investments suggested that 48% of people age 55 to 65 believe they will need only $50,000 to pay for their health-care costs in retirement. But the true number is likely to be much higher than that. 

According to the Employee Benefits Research Institute, a couple on Medicare with median drug expenses (meaning at the mid-point of expected prescription drug use for retirees) needs approximately $151,000 in savings "to have a 50 percent chance of having enough money to cover health care expenses in retirement. 

Thankfully, planning ahead means you can achieve both a long life and the ability to pay for it. The first step is to learn the basics of Medicare. For example, did you know Medicare is divided into four parts?

  • Part A covers inpatient hospital care, nursing facilities, and hospice.
  • Part B is for physician services, mental health, laboratory test, and medical equipment. 
  • Part C allows you to receive all your benefits through a provider organization like an HMO if you already have Parts A & B.
  • Part D helps pay for many prescription medications. 

Choosing the best type of coverage involves looking at your current and expected health needs, and evaluating your expected future income. Many women sometimes feel overwhelmed by all the options and choices out there, some of which are more appropriate than others. But choosing the best type of coverage for you will be crucial when it comes to paying for your medical expenses. 

And then there's Medigap, a type of supplemental insurance sold by private insurance companies designed to help pay those costs not covered by Medicare. Medigap isn't free, and certain criteria must be met before you can purchase it, but it's definitely a route to consider. 

Of course, there's always the possibility that Medicare alone won't be enough. Luckily, there are still things you can do. Take investing, for instance. Your investment portfolio can be invaluable tool for affording health care if used wisely. One way to use it wisely is to invest a portion  of your money with growth in mind. It's often thought that growth-oriented portfolios are for younger people, while retirees should trend toward more conservative investments. And while there is some truth to that, it's important to keep your retirement savings ahead of inflation. Being overly conservative prevents you from being able to do that. 

But in the end the most important step you can take is to plan for the future. Fortunately, you don't have to do it alone. If you have nay questions about how to choose the proper Medicare plan, how to invest properly, or to find out other potential strategies, give me a call at (330)-666-8131. As you know, I specialize in helping women achieve financial independence ... and that includes being able to pay for health care. 

Whatever you do, remember: paying for health care can be a headache ... but it doesn't have to be a nightmare. Get your planning started today, and let me know if I can ever be of assistance!

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.