Most retirees aim to cut back on spending to stretch their savings, but healthcare is one area where costs can spiral out of control — even with Medicare. In a new warning to older Americans, personal finance expert Suze Orman urges retirees not to underestimate the true price tag of Medicare coverage in retirement.
Healthcare Costs Are Soaring for Retirees
According to 2024 estimates, the average retired couple will need around $395,000 to cover healthcare expenses after age 65 — and that’s after enrolling in Medicare. Many assume that Medicare will shield them from major costs, but Orman says this assumption can be financially dangerous.
“Medicare may look affordable on the surface, but the out-of-pocket costs can surprise you,” Orman said in a recent statement. “And those surprises can destroy your retirement plan.”
Medicare’s Hidden Pitfalls
While Medicare Part A is typically premium-free, it comes with a $1,676 hospital deductible per stay. That figure alone can wreak havoc on a fixed income. Even worse, Original Medicare doesn’t cover essential services like dental, vision, or hearing — routine expenses that add up quickly as we age.
Seniors seeking broader benefits often turn to Medicare Advantage, which adds a monthly premium but can still leave policyholders vulnerable to high out-of-pocket costs for specialized care or complex medical needs.
Why You Should Invest in Medigap
To shield against unexpected expenses, Orman strongly advises retirees with Original Medicare to buy a robust Medigap policy.
“You are responsible for 20% of your Part B expenses,” she explains. “That’s why a Medigap policy is essential. It fills in the gaps.”
Medigap, or Medicare Supplement Insurance, helps pay for deductibles, copayments, and coinsurance that Original Medicare doesn’t cover. It can dramatically reduce hospital bills, lab fees, and even home healthcare costs — all without the surprise charges that derail budgets.
Although Medigap requires higher monthly payments, Orman believes the long-term savings make it worth it: “By paying more upfront, you protect yourself from the major costs that could bankrupt your retirement.”
Other Ways to Cut Healthcare Costs in Retirement
Here are some additional, practical ways to control medical spending:
- Health Savings Accounts (HSAs): If you’re still working, contribute to an HSA for tax-free growth and withdrawals for healthcare.
- Income Management: Since Medicare Part B premiums are income-based — ranging from $185 to $628.90/month in 2024 — reducing your modified adjusted gross income can lower your premium bracket.
- Stay Active: A study of nearly 25,000 Canadian seniors showed that regular physical activity slashed hospital visits and healthcare expenses.
Bottom Line
Suze Orman’s message is clear: Don’t let Medicare lull you into a false sense of security. Understand the hidden costs, plan for them, and consider supplemental coverage like Medigap to preserve your peace of mind — and your retirement savings.
– More Medicare Coverage and Updates from FingerLakes1.com
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