Retirement Health Care Costs
One thing retirees need to remember is that they probably won’t have the same medical benefits and health care coverage that they had when they were employed. This includes dental coverage, medical coverage, and perhaps even some other nice benefits including life insurance. Of course, even those who are working are probably seeing inflation impacts on their employer-provided plans.
When you retire or are retired, you have many, often complicated, choices to make. These include: 1) When to start Social Security; 2) What Medicare Supplement Insurance (Part B) to purchase; 3) Whether or not to buy a dental coverage policy; 4) What Medicare Part D (Drugs) policy to obtain; 5) and perhaps vision coverage or term life insurance.
Cigna and Express Scripts
I decided to use Physicians Mutual for my Medicare Part D coverage. I chose the plan that will reduce my costs in the long haul. It is very affordable, and premium increases have been minimal. My PM agent recommended a drug coverage plan provided by the State of Wisconsin, which was very low cost. Because I don’t take many prescriptions, that made the most sense.
As I got older, and my care providers prescribed more medicines for some skin issues, so I asked my agent for a more long-term solution. He recommended Express Scripts. Sadly, Express Scripts was acquired by Cigna. Apparently, Cigna sees this as a marvelous profit opportunity. In 2022 my premium is increasing by 64%. I only take one medication at the present time, and it costs me $6 every 3 months. So I pay $24 per year for my medications.
Is Sixty-Four Percent Bad?
If the premium was $10 per month, a 64% increase wouldn’t be a McDonald’s meal. The new premium is certainly well within our budget. The cost is increasing from $330 per year to $542.40. This will not have a material impact on our overall budget. However, for some retirees, this is a terrible blow. I share this so that you enter your retirement years with eyes wide open. Inflation can hurt if you don’t prepare with wise planning and good investments.
Recommendation
Before you purchase any of these solutions, do the mathematics. Think about the long-term costs. For example, dental coverage sounds like a prudent choice. However, every time I have run the numbers, I discover that it is better to self-insure for dental services. Yes, there are some surprises, but they are reasonable and can be paid from our investment income. Furthermore, our dentist gives a discount for paying with cash. So, talk to your providers when you enter retirement. Costs and inflation do matter.
Know Your Flocks & Herds 