A test here, an office visit there, a new medication. You already know how medical costs can add up. It’s one of the top worries for retirees across the country.
We talked to Adam Thackery, Chief Financial Officer at Devoted Health, about why Original Medicare may not be enough — and how to be smart with your healthcare dollars.
Some people think, “I’ll be set once I go on Medicare.” What’s the issue with that?
Well, you’re still going to have costs, and they might be high. It’s true that Original Medicare covers things like hospitals stays, office visits, and a lot more. But “covers” doesn’t mean “pays the full cost.” If you’ve had generous plans from employers your whole life, you may be shocked when you add up the deductibles, copays, and coinsurance.
And there are things that Original Medicare just doesn’t cover, like prescription drugs, dental, vision, and hearing. That means more plans and more costs.
So how much does Medicare cost the average person after they retire?
For a retired couple with Original Medicare, it’s about $280,000 over 21 years. That’s according to a 2018 study by Fidelity, and it’s up from $260,000 just two years before.
Yikes! What can you do to lower those costs?
That’s the million dollar question! Or, I guess, the $280,000 one. I’m clearly biased on this one, since I work at Devoted, but one option is to look into Medicare Advantage plans.
At their best, these plans roll all your benefits into one package, so you get medical, hospital, and prescription drug coverage at a lower cost. And you can often find plans with low monthly premiums, as low as $0. Plus, many will have limits on how much you’ll spend out-of-pocket each year.
Any tips for people trying to pick the right plan?
That’s another article in itself. (You can find it here). But since we’re talking costs, the biggest thing is to look at how you actually use your plan. Great benefits and amazing perks aren’t worth anything unless you use them.
Do you have long-term health conditions and see specialists often? Do you get a lot of blood work done? Or maybe you know you’re going to need surgery soon, like a hip replacement. The key is to understand where your biggest costs are and see which plans can help the most.
Should people stick with the same plan year to year?
Not necessarily. Plans always change — and so does your health. It’s best to do your homework each year and go with trusted plans that keep your costs down. And if two plans stack up closely, look at their perks. Do you get a gym membership? Money toward glasses or hearing aids? Those are more ways you can save.
Any savings tips when it comes to using a plan?
Definitely. One of the first things we focus on with new members is preventive care, like flu shots and cancer screenings. When you catch conditions early on, it can keep you healthy — and that can save you money. Plus, a lot of preventive service won’t cost you anything.
What about prescription drugs?
Again, start with what you use. Does your plan cover your current medications? How much are you paying for them? Do you have to meet a deductible first?
Many plans also have a mail-order option for prescription drugs. It’s not just about the ease of having drugs and refills come to your house — you’ll also usually save money. And it’s always worth checking with your doctor or pharmacist about generic alternatives, which often cost a lot less than brand-name drugs.
The main thing is to start with an understanding of what you really need. And if you need help with that — call around to different plans. The better ones are happy to talk you through it. Then, once you join a plan, don’t be shy. We tell our members to call us all the time — we’re happy to help them find ways to save money.
You can spend wisely and save on healthcare:
- Don’t get too caught up with countless benefits and perks — look at what you actually use and make sure your plan keeps your costs down
- Shop Medicare plans every year to see where you can save
- Keep up with preventive care, like flu shots and cancer screenings
- Make sure your plan covers your medications — and take advantage of mail-order pricing
- Talk to your plan and ask about ways you can save