Healthy Aging & Financial Security: Planning for Healthcare in Later Life
September marks a season of change. As the air gets crisper and we settle into autumn routines, it’s a natural time to reflect on the changing seasons of our own lives. Coincidentally, September is home to Healthy Aging Month, National Cholesterol Education Month, and World Alzheimer’s Month. This convergence offers a perfect opportunity to discuss a topic that sits at the intersection of them all: the critical link between your health and your financial security in retirement.
The Reality of Healthcare Costs in Retirement
We all dream of a retirement filled with travel, hobbies, and time with loved ones. A crucial element in achieving that dream is planning for healthcare expenses. According to a 2024 analysis by Fidelity, a 65-year-old couple retiring this year could expect to spend an average of $315,000 in after-tax dollars on healthcare costs throughout their retirement.
While Medicare is the foundational health insurance for most Americans over 65, it’s not designed to cover everything. Deductibles, copayments, and coinsurance can add up. More importantly, certain health conditions require specific, and sometimes costly, management. This is where proactive planning becomes your most powerful tool.
Aligning Your Plan with Your Health Needs
Your health isn’t static, and your insurance coverage shouldn’t be either. Let’s look at two common health concerns associated with aging and how they relate to your healthcare plan.
- Managing Cholesterol and Other Chronic Conditions: Millions of Americans manage high cholesterol with medication. Your Medicare Part D (Prescription Drug) plan is key here. Every year, insurance companies can change their “formulary,” which is the list of drugs they cover and at what price tier. The brand-name statin that was affordable on your plan last year might move to a more expensive tier next year, or a generic version may become the preferred option. Failing to review your Part D plan annually could mean you’re needlessly overpaying for essential medications.
- Planning for Cognitive Health: With World Alzheimer’s Month in mind, it’s important to understand how coverage works for cognitive decline. Medicare Part B covers an annual wellness visit where you can discuss cognitive function with your doctor and may cover cognitive assessments. However, a common and costly misconception is that Medicare covers long-term custodial care—the non-medical help with daily activities like dressing and bathing that is often required in later stages of dementia. This type of care is typically paid for out-of-pocket or with a separate long-term care insurance policy. Certain specialized Medicare Advantage plans, like Chronic Condition Special Needs Plans (C-SNPs), may offer additional benefits for those with dementia, but it’s vital to know what your specific plan entails.
Your Annual Check-Up: The Medicare Annual Enrollment Period (AEP)
Just as you schedule an annual physical, you should conduct an annual insurance check-up. The perfect time for this is the Medicare Annual Enrollment Period (AEP), which runs from October 15 to December 7.
During AEP, you can make changes to your coverage for the upcoming year. This is your chance to ensure your plan still fits your life. Ask yourself:
- Are all my prescription drugs still covered at the best price?
- Are my preferred doctors, specialists, and hospitals still in my plan’s network?
- Does my plan’s out-of-pocket maximum still align with my budget and risk tolerance?
Taking an hour to review your plan now can save you thousands of dollars and significant stress in the year ahead.
Being proactive about your health and finances empowers you to age gracefully and securely. The upcoming AEP is your dedicated time to align your healthcare coverage with your health needs and financial goals. If the options feel overwhelming, remember that expert guidance is available to help you navigate your choices with confidence.