Planning for Unexpected Healthcare Costs

January 13, 2021

As we age, planning for retirement is essential to living comfortably. Many of us are thinking about saving enough funds to cover day-to-day living expenses while still having enough set aside for things like travel and hobbies. However, with age, unexpected healthcare costs may arise. If you haven’t planned ahead, the cost of healthcare and prescription drugs can be an enormous threat to your retirement savings. A recent study showed that seniors withdrew approximately $22 billion from their long-term savings in a 12-month period to cover healthcare-related expenses. In addition, 10% of seniors over the age of sixty-five choose not to seek medical treatment because they cannot afford to.

To prevent this from happening to you or a loved one, we suggest considering some of the following options:

  1. Designate a separate savings account with a high-interest rate specifically for future unexpected medical costs.
  2. Consider long-term care insurance for costs that are not covered by Medicare, Medicaid, or your standard health insurance. It is wise to consider purchasing long-term care insurance in your fifties or early sixties.
  3. Research tax deductions available to seniors and their caregivers that help alleviate the cost of care. Provided they’re required for medical reasons, a broad range of medical expenses, including prescription costs, eyeglasses, and dental work, as well as food, clothing, and home modifications, may qualify as tax deductions.

While it is difficult to predict what, if anything, may ail you or a loved one in the coming years, these are the most common unexpected healthcare expenses that seniors in America face:

Dental Care

Dental care is not covered by Medicare and often comes with hefty out-of-pocket expenses. Whether you require routine cleanings or more complex procedures, chances are that the cost to you will be substantial.

Vision Care

While Medicare does cover the treatment of some eye diseases or injuries, including glaucoma and cataracts, it will not cover your yearly screening or eyeglasses. This is alarming when you consider how much our eyesight can change and worsen as we age.

Hearing Services

Your standard Medicare plan will not cover hearing aid devices, which many seniors eventually need. The average cost of a hearing aid can range from $1,000 to $6,000, depending on the quality.

Long-Term Care

Over the age of sixty-five, seniors have a 70% chance of requiring some long-term care, and 20% will need it for more than five years. Typically, Medicare will only cover some of the cost of a long-term care community if the stay is related to a medical problem or recovery from specific medical procedures.

With the high cost of healthcare today and the possibility that you may incur unexpected costs in the future, we recommend working with a financial advisor to help you create a plan that fits your needs, lifestyle, and budget.

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