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The ins and outs of Medicare and average health care costs

Aside from relying on Social Security, many seniors count on Medicare to help with healthcare expenses in retirement. In a nutshell it’s health insurance for people 65 or older and includes Part A (hospital insurance) and Part B (medical insurance).

Usually, Part A is premium-free if you’ve paid Medicare taxes for at least 10 years. You can also buy it at either $278 or $506 a month, depending on how long you or your spouse worked and paid Medicare taxes. Part B carries a monthly premium of $175.

Specifically, Part A covers inpatient hospital care, skilled nursing facility, hospice, lab tests, surgery and home health care; Part B covers doctor and other health care providers' services and outpatient care, durable medical equipment, home health care, and some preventive services.

But retirees can still expect to pay healthcare costs beyond Medicare coverage. Fidelity notes that the average 65-year-old couple will spend about $12,200 on healthcare in their first year of retirement, while per-person personal healthcare spending for those 65 and older was $22,356 in 2020, according to the non-profit Centers for Medicare & Medicaid Services. Traditional Medicare does not cover dental, hearing, and vision services and carries deductibles along with other cost-sharing requirements.

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3 ways to cut your healthcare expenses

While the financial news for pre-retirees and those 65 and older may seem glum, many can leverage savvy strategies to control costs. There’s a definite urgency, as Gallup reports that one in three adults ages 50 and up have forgone basics such as food to pay for healthcare.

Price-check your pharmacy. Many seniors take drug prices for granted based on convenience, but they aren't created equal insofar as pharmacies go. Billionaire Mark Cuban has set up CostPlus Drugs, an online service that delivers prescription medications at discounted prices. Using the example of a 30-count supply of 400 mg Imatinib (a cancer growth blocker), Cuban claims that customers can save close to $10,000 a year.

Limit long-term expenses via preventive care. Medical self-care acts as a preemptive strike against soaring expenses. Chapter.org lists a variety of vaccines and shots that prevent hepatitis B, flu and COVID-19, as well as screenings that help healthcare providers catch treatable infections and diseases early. All are covered under Medicare.

Enroll in a Medicare Savings Program. If you lack retirement savings and/or have limited income and assets, Medicare Savings Programs (MSPs) can help cover Medicare costs. These special benefit programs sponsored by state Medicaid agencies do have income limits for individuals and married couples. These vary widely depending on your location and situation — anywhere from roughly $1,200 to $6,700, according to the National Council on Aging — so check with your State Health Insurance Assistance Program. These agencies also provide guidance and counseling to address healthcare cost needs.

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Lou Carlozo Freelance writer

Lou Carlozo is a freelance contributor to Moneywise.

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