Did you know a typical couple may spend over $400,000 on healthcare during retirement — and that doesn’t even include long-term care? For many in Central Pennsylvania, growing medical bills add extra pressure to everyday living expenses.

As experienced retirement planning specialists in Central Pennsylvania, 1st Choice Financial Services, Inc., can help you prepare for increasing healthcare costs for a more stable, comfortable retirement.

In this blog, you’ll find practical ways to plan for medical expenses in retirement — so you can face the future with more confidence and fewer surprises.

Understanding the Landscape of Healthcare Costs in Retirement

Medicare: What It Covers and What It Doesn’t 

Medicare is a vital component of healthcare in retirement, so it’s important to understand what it may and may not cover. In general:

• Part A typically helps cover hospital stays, short-term skilled nursing facility care (under specific conditions), some hospice care, and limited home health services. 
• Part B usually assists with doctor visits, outpatient care, preventive services, and some medical equipment. 
• Part D may help pay for prescription medications.

There are often gaps in Medicare coverage, such as for dental, vision, hearing, and long-term care, which could leave retirees with unexpected expenses.

You may be able to choose from different Medicare Advantage plans. Depending on where you live, some plans might offer extra benefits like dental and vision care. Evaluate the options carefully to find the plan that works best for you.

The Reality of Out-of-Pocket Expenses 

Even with Medicare in place, you could still pay a share of costs through deductibles, co-pays, and coinsurance. Prescription drugs — especially brand-name or specialty medications — can be a major ongoing expense.

Original Medicare doesn’t limit how much you might pay out-of-pocket each year, but some Medicare Advantage and Part D drug plans do set yearly spending caps for covered services. If your plan has a cap, you may still have to pay quite a bit before you reach it.

Factoring these expenses into your overall retirement budget may help you avoid financial surprises later.

Long-Term Care: A Significant Consideration 

Long-term care refers to help with daily activities — like bathing, dressing, or eating — which may be needed due to age, illness, or disability. Medicare generally does not pay for custodial long-term care in a nursing home or ongoing personal care at home.

To help prepare, you could explore long-term care insurance, build personal savings, or consider other funding methods that fit your circumstances.

Proactive Strategies for Managing Healthcare Costs in Retirement

Health Savings Accounts (HSAs): A Powerful Tool

If you qualify for a Health Savings Account (HSA), it can be a valuable resource for handling medical expenses now and later in retirement. An HSA typically offers a triple tax advantage:

• Contributions may be tax-deductible.
• Funds can grow tax-free.
• Withdrawals used for qualified medical expenses are usually tax-free.

If you have a high-deductible health plan (HDHP), you may be able to contribute to an HSA up to annual IRS limits. 

Over time, these funds could be used to help pay for Medicare premiums, co-pays, and other eligible healthcare costs in retirement. 

Exploring Supplemental Insurance Options

Since Original Medicare does not cover everything, you might consider adding supplemental insurance to help manage gaps:

• Medigap (Medicare Supplement Insurance) policies may help pay for some of the out-of-pocket costs that Medicare doesn’t cover, such as co-pays, coinsurance, and deductibles.
• Medicare Advantage Plans (Part C) can be an alternative to Original Medicare. Where available, these plans might offer extra benefits like dental, vision, and hearing, but coverage and provider networks can vary. Compare options carefully to help you find a plan that fits your situation. 

Incorporating Healthcare Into Your Overall Retirement Budget

Healthcare costs can be unpredictable, so it’s smart to estimate what you may spend each year and review those estimates regularly. Many retirees plan ahead by covering medical expenses with a mix of insurance, savings, and, when eligible, contributions to an HSA.

If you can’t qualify for certain coverage, like long-term care insurance, setting aside extra savings for possible out-of-pocket costs may help cover the gap. Keeping your budget flexible and reviewing it each year can help you adjust for changing health needs and unexpected expenses.

The Role of Healthy Living

Healthy habits can go a long way toward helping you manage medical costs. While no one can prevent every health condition, regular exercise, nutritious meals, and routine check-ups may help lower the risk of costly chronic illnesses and reduce the need for frequent medical care.

Small lifestyle choices today can add up to meaningful savings down the road.

How a Retirement Planning Specialist Can Help

Planning for healthcare expenses in retirement can feel overwhelming, especially when you consider changing Medicare rules, unpredictable out-of-pocket costs, and the possibility of needing long-term care. 

Working with retirement advisors in Central Pennsylvania may help you sort through these moving parts and build a plan that fits your needs.

At 1st Choice Financial Services, Inc., we help individuals and families across Central Pennsylvania prepare for healthcare costs and other key aspects of retirement. Our team is here to assist you in:

• Analyzing current and future healthcare needs, so you have a clearer picture of what expenses might arise.
• Integrating estimated healthcare costs into a personalized, comprehensive retirement plan.
• Exploring suitable insurance options, including Medigap or Medicare Advantage plans where available.
• Providing wealth management strategies designed to support your goals and preserve your retirement lifestyle in Harrisburg and surrounding communities.

As experienced retirement planning specialists in Central Pennsylvania, 1st Choice Financial Services, Inc., provides comprehensive wealth management in Harrisburg, Hershey, Halifax, Lancaster, Lebanon, Enola, Mechanicsburg, and nearby areas.

Take Control of Your Retirement Healthcare Future

Healthcare costs shouldn’t catch you off guard. Understanding what Medicare covers (and what it doesn’t), exploring supplemental insurance, setting aside dedicated savings, and maintaining healthy habits can all play a role in managing expenses.

Start early, stay informed, and get some help from a team that knows Central Pennsylvania inside and out.

Ready for personal guidance? Connect with 1st Choice Financial Services, Inc. — your trusted retirement advisor in Harrisburg, PA.

Contact us today to start building a plan that keeps your healthcare costs and financial goals in balance.

Investment advisory services offered through Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser. The views, statements and opinions expressed herein are those of the author,  and not necessarily of Foundations or their affiliates.  The content provided is for educational purposes only and the views reflected are subject to change at any time without notice.   No investment, legal or tax advice is provided.    Always consult with a professional.  Foundations deems reliable any statistical data or information obtained from  third party sources that is included in this article,  but in no way guarantees its accuracy or completeness. This is not endorsed or affiliated with any federal Medicare program, nor any U.S. government agency.  If applicable, we do not offer every plan available in your area and contacting us will direct you to a licensed insurance agent.  Any information we provide is limited to those plans we do offer in your area.  Please contact Medicare.Gov or 1-800-MEDICARE to get information on all of your options.