Planning for Medicare and Your Health Expenses
If you are turning 65 at any time in 2026 or leaving group health insurance coverage, you should consider your financial planning. You don’t want to be surprised by unexpected expenses, extra costs, or a lack of funds. When you move from group or individual health insurance, you will find that Medicare coverage and price are very different.
Here are some things to review as you plan to enroll in Medicare:
1. What’s going to be your lifestyle when you move to Medicare?
Some people plan to travel to other states or to vacation outside the country, e.g., in Asia or Europe, or by cruising. You should evaluate access to care at any time, not just for emergencies. Consider the financial resources needed to cover the cost differences.
2. Review your health history and your expectations about the kind of care you want.
Determine whether you are comfortable with a system where all providers are under one roof, e.g., Kaiser. Some people want the ability to see a specialist of their own choosing. This usually occurs after a serious illness or disease diagnosis. In those situations, people research to find the top doctors/hospitals knowledgeable about their condition.
3. Evaluate your financial situation.
Do you have enough resources to pay for unexpected costs? Medicare does not cover dental or vision. There are Medicare Advantage plans that include dental and vision coverage, but this is usually limited. Some drugs may be covered under your current health plan, but may not be in the Medicare drug formulary. If you want access to experimental treatments, they are not usually covered under Medicare. You will need an additional $200,000 to $300,000 while you have Medicare coverage. I often get calls from clients who are considering dental implants. Those can cost $5,000-$7,000/tooth. If you need several teeth, the costs definitely add up. The same goes for hearing aids. Some Medicare plans will include coverage, but that is often limited. Costs for contacts and glasses can add up, even with a vision plan.
4. Consider tax planning and investments.
If you earn above a certain income, you will pay extra for your Medicare Part B and Medicare drug coverage. If you are a couple filing jointly, this is true, even if only one of you is eligible for Medicare coverage. This extra cost is known as the IRMAA or Income-Related Monthly Adjustment Amount. The additional cost can be substantial if you don’t plan for it. Your financial advisor and CPA should be able to advise you about what to expect. I always ask clients about their income so that they won’t be surprised by the additional cost.
In summary, as you prepare to move to Medicare coverage, your decision should not be made in a vacuum. Finances play an important role in determining the quality of your medical care.
