Healthcare costs after retirement: know the basics

Planning for out-of-pocket healthcare costs after retirement may seem intimidating, especially as healthcare costs continue to rise. But as with any major undertaking, careful planning is the path to a better outcome.

First things first

To begin, you’ll want to start with the basics:

• Know the plan(s) your employer offers. Be sure you understand the coverage, premiums, contributions, available service providers and out-of-pocket maximums.
• Consider a high-deductible health plan (HDHP). This can save you money if you’re generally healthy and have low medical expenses.
• If you are 65 or older and still working, and you desire to continue contributing to a health savings account (HSA), be aware that enrolling in original Medicare means you'll need to stop these contributions.
• Schedule a Nationwide^® Healthcare Cost Assessment for yourself and your family members. This may help you better anticipate future expenses.
• Expect the unexpected. Plan for any surprise medical costs by building emergency savings.

Health savings & spending accounts

Speaking of taxes, your employer may offer tax-advantaged options for paying medical and dependent care expenses. The most common tools of this type are FSAs, Dependent Care FSAs, and HSAs.

What is a Flexible Spending Account (FSA)?

Your contributions are pre-tax, to pay qualified medical expenses. You can even withdraw the full amount on the first day of the plan year for qualified expenses.

What is a Dependent Care FSA?

Your pre-tax contributions can be used to pay child- or dependent-care expenses for children under age 13 or dependents who are unable to care for themselves.

What is a Health Savings Account (HSA)?

Available with certain HDHPs, these can help you reduce taxes and set aside money for current and future qualified medical expenses.

Use our resources to learn more about managing health care costs and long-term care planning. Once you’re ready, talk to an investment professional to find more ways to plan for medical and health care expenses in retirement.

Protected income can help

Out-of-pocket healthcare costs (from Medicare premiums to prescription copays, vision or dental coverage and more) can be lofty and predictable. Consider how a source of protected income aligned to the level of expenses in your personalized cost assessment report can help cover these annual expenses.