Older Americans Are Sorely Misinformed About Medicare — and That Could Hurt Them During Retirement

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When you retire, it’s possible you’ll find that healthcare becomes your single biggest recurring expense. This might especially hold true if your house is paid off by the point your profession involves an end.

That is why it is so vital to know what to anticipate from Medicare once the time comes to begin getting coverage. But recent data from Fidelity reveals that older Americans aged 58 to 76 lack key knowledge in relation to Medicare coverage and enrollment. And that might lead to a world of monetary pain.

A person in scrubs gestures at a seated person.

Image source: Getty Images.

Closing a glaring knowledge gap

When Fidelity asked baby boomers when Medicare enrollment begins, 57% indicated age 62. But while that’s when seniors are allowed to first join for Social Security, Medicare eligibility doesn’t begin until age 65.

Not knowing that might prove problematic for early retirees. In the event you make the choice to go away the workforce at age 62 considering you will be covered under Medicare, but then discover that will not be the case for an additional three years, you would possibly struggle to cover the associated fee of a distinct health plan.

Moreover, 41% of baby boomers surveyed by Fidelity said there are limits on out-of-pocket spending under Medicare. However the only method to limit out-of-pocket spending is to enroll in a Medigap plan (supplemental insurance). Not knowing that might leave you on the hook with a number of healthcare expenses you may’t easily afford.

Finally, 40% of baby boomers said that Medicare covers the associated fee of nursing-home care. That is false. Medicare will cover the associated fee of a stay at a talented nursing facility because it pertains to recovering from an injury or treating an actual illness. But Medicare doesn’t cover custodial care or help with on a regular basis living. To get that coverage, you’ll have to purchase long-term care insurance.

Don’t set yourself as much as struggle financially

Not knowing how Medicare works could leave you ready where you are ill-equipped to cover your future healthcare bills, in order that’s a scenario value avoiding. And you may accomplish that by spending a while reading up on Medicare before you are able to take into consideration retiring.

At the identical time, it pays to allocate money to future healthcare expenses, and a health savings account (HSA) is a great option in that regard. HSA funds never expire, so you may contribute to those accounts during your working years, invest the cash you needn’t withdraw straight away, and carry a pleasant balance with you into retirement.

You might have heard which you can’t use an HSA to cover Medicare expenses, but that is under no circumstances true. While you may’t contribute to an HSA when you’re enrolled in Medicare, you may absolutely take withdrawals to cover things like Medicare deductibles and copays.

The truth is, when you’re reading up on Medicare, do yourself a favor and learn more about HSAs, too. Having that knowledge could push you to make smart decisions that let you cover your future healthcare costs with less stress.

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