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5 ways to save for health care costs in retirement

Don’t let your physical health ruin your financial well-being.

No matter your age, it’s never too early to start saving for your retirement — especially for your health care. It’s expected that the average retired 65-year-old couple will pay approximately $315,000 for health care over the remainder of their lives, including premiums and out-of-pocket costs. (Premiums are monthly insurance bills.)

And that’s just the average. If your health isn’t so great (or might be getting worse later on), your costs could skyrocket. In fact, the top 5% of Medicare spenders are responsible for more than 37% of total Medicare out-of-pocket spending.

And this doesn’t account for all potential costs. “That does not include long-term care costs not covered by Medicare,” says Rajiv Nagaich, J.D., L.L.M. He’s an elder law attorney and the author of Your Retirement: Dream or Disaster? Out of pocket long-term facility care can cost more than $25,000 per year — and none of it is covered by Medicare.

Still, it’s possible to take some actions now, as well as some when you are ready to retire, that can make you financially happier and healthier.

Wondering which health plan is right for you? Get more details now or call a licensed agent at 1-844-211-7730.

Right now: Set aside money in a health savings account

If you’re on a high deductible health plan (HDHP), set up a health savings account (HSA) to cover future health care costs. An HSA is a type of savings account that allows you to set aside pretax money to pay for medical expenses such as deductibles (what you have to pay before your insurance kicks in) and copayments and coinsurance (a fixed dollar amount or a percentage you pay for health services after you’ve paid or met your deductible).

For 2023, you are allowed to contribute up to $3,850 to an HSA for individual coverage and up to $7,750 for family coverage. (If you are 55 or older, you can contribute an additional $1,000.) The money can pay for everything from doctor visits to hospital services to over-the-counter medicines.

“HSAs offer triple tax advantages,” says Brian Colvert, the CEO of Bonfire Financial in Colorado Springs, Colorado. “Contributions to an HSA are tax deductible, which can lower your taxable income. The funds in the HSA grow tax-free, meaning you won’t owe taxes on the interest or investment gains. And when you use the funds for qualified medical expenses, withdrawals are tax-free.”

HSAs offer another big advantage: The money rolls over from year to year. And once you turn 65, you can use the money as you like without paying the 20% tax that younger account holders may have to pay on nonmedical distributions.

Ready to explore insurance plans where you live?

Right now: Invest in long-term care insurance

As mentioned above, Medicare doesn’t cover long-term care, such as the care you might receive in a nursing home. Older adults have almost a 70% chance of needing this kind of care at some point.

UnitedHealthcare offers certain supplemental insurance policies that you can buy in addition to your regular health insurance policy. These can fill gaps in medical coverage.

So, for example, you could get a hospital indemnity insurance plan, underwritten by Golden Rule Insurance Company. It pays you benefits when you are in the hospital, whether for planned or unplanned reasons, or for other medical services, depending on the policy.

Another example: A critical illness insurance plan, underwritten by Golden Rule Insurance Company, pays you a lump sum cash benefit in the event of a qualifying serious illness.

“Long-term care insurance can help protect your assets, help reduce the burden on family members, and help ensure quality care in case you need long-term care services such as nursing home care or in-home care,” Colvert says.

Long-term care insurance reimburses you for each day that you need help with activities of daily living such as eating and bathing (up to a limit based on the policy). The younger you are when you purchase the insurance, the lower your premiums may be. Other cost factors include the duration of coverage, and the policies may include optional benefits such as benefits that increase with inflation.

Got questions about supplemental health insurance? Get more details now or call a licensed agent at 1-844-211-7730 to discuss your options.

At retirement: Shore up your Medicare

Medicare Part A, which covers hospital services, is free after you’ve paid a certain amount in Medicare taxes. (In most cases, that means working for at least 10 years.) To be covered for doctor visits and other outpatient services, you’ll need to enroll in Medicare Part B. For 2023, the cost is $164.90 per month for most people.

Medicare Parts A and B, which together are called Original Medicare, offer broad coverage, but they have a few key limitations. First, there isn’t any cap on what you have to pay out of pocket. Second, they don’t cover prescription drugs, which are the biggest out-of-pocket cost Medicare beneficiaries face.

To reduce your out-of-pocket costs, you might think about buying a Medicare Supplement Insurance (Medigap) plan. You can buy these standardized plans from private companies, and they can help with costs like copayments, coinsurance and deductibles. What they don’t cover is prescription drugs. If you think you’ll need help with those, your best option might be a stand-alone Medicare Part D plan. (That’s the part of Medicare that will provide you with prescription drug coverage.)

At retirement: Consider Medicare Advantage

Instead of trying to piece together the multiple parts of Medicare, consider choosing a Medicare Advantage (Part C) plan. Sold by private companies, Medicare Advantage plans replace Parts A, B and, in most cases, Part D. Many also include dental and vision coverage, which Original Medicare does not offer except in certain circumstances.

With Medicare Advantage, you pay the Part B premium. You’ll pay an average of $18 per month for the premium, although most Medicare Advantage plans charge no premiums. Since the 2023 average basic monthly Part D premium is projected to be $31.50, a Medicare Advantage plan could start saving you money right away.

“Not all insurance options available to older adults offer good preventive care coverage,” Nagaich says. “It’s important to choose a Medicare plan that gives you access to a variety of preventive services such as nutritionists, gym memberships and complementary health care.”

Do now and at retirement: Take care of your health

While it’s important to have insurance that helps you cover medical costs, it’s even better to offset those costs in the first place. Today, 6 in 10 American adults have a chronic disease, and most of those are the result of lifestyle choices. By eating well, staying physically active, and avoiding tobacco and excessive drinking, you can increase your odds of enjoying a healthier — and less expensive — retirement.

One last option: You could retire early. If you choose that option, you might want to explore a Short-Term Medical plan (get more details now) or a TriTerm Medical plan (explore your options now), underwritten by Golden Rule Insurance Company. Contact a licensed agent at 1-844-211-7730.


Centers for Disease Control and Prevention. “Chronic Diseases in America.” Retrieved from Accessed April 12, 2023

Centers for Disease Control and Prevention. “Living Well With a Chronic Condition.” February 8, 2023. Retrieved from

Centers for Medicare & Medicaid Services. “2020 Medicare Current Beneficiary Survey Annual Chartbook and Slides.” Retrieved from Accessed April 12, 2023

Centers for Medicare & Medicaid Services. “Biden-Harris Administration Announces Lower Premiums for Medicare Advantage and Prescription Drug Plans in 2023.” September 29, 2022. Retrieved from

Internal Revenue Service. “Publication 502 (2022), Medical and Dental Expenses.” February 7, 2023. Retrieved from

Internal Revenue Service. “Publication 969 (2022), Health Savings Accounts and Other Tax-Favored Health Plans.” February 1, 2023. Retrieved from “How Much Care Will You Need?” February 18, 2020. Retrieved from “What Is Long-term Care Insurance?” February 18, 2020. Retrieved from

University of Washington. “Planning for Health Care Costs in Retirement.” June 27, 2022. Retrieved from

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