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How much should I expect to pay for Medicare in retirement?

Joann North

Answered By

Nancy Nawn, CFP, CIMA

Managing Partner and Financial Planner at WatchDog Planning

Question:

How much should I expect to pay for Medicare in retirement?

Answer:

Everyone on Medicare pays the Part B medical insurance premium of $174.70 per month in 2024. Additional premium costs depend largely on whether a retiree signs up for Medicare Advantage or Original Medicare. Medicare Advantage, also known as Part C, offers HMO and PPO plans that cover hospital, medical, and prescription care. Premiums can be as low as $0 per month, which is cost-effective for many retirees, but co-pays can get expensive, and access to healthcare is limited by geography and providers in the plan. Original Medicare allows recipients to purchase separate supplemental (MediGap) plans (as well as prescription plans), that cover any sharing costs assigned to the patient. Policies can run $200 to $400 per month and are accepted by most healthcare providers, giving retirees wider access to care nationwide.

I always plan for my clients to pay for Original Medicare with MediGap/Prescription policies if financially feasible. This structure offers access to the best medical care wherever it is needed without co-pays. All Medicare enrollees are eligible for Original Medicare during initial sign-up and can switch to Medicare Advantage at any time. But beware, switching back to Original Medicare requires underwriting, and most retirees will have some pre-existing condition, such as high cholesterol, that will disqualify them from obtaining a new MediGap policy.