Health Care Costs
by: Aric Egmont, Fidelity Investments
Here’s an articles from a recent Fidelity publication on the subject of Health Care.
Health Care Costs
Letter of concern to the editor- In "Seven Facts About Health Care Planning" (Spring 2008), I was surprised by the amount of savings recommended for future healthcare costs of $225,000 (beyond long-term care and regular retirement requirements). I thought that with Medicare and available Medicare supplements, out of pocket would be minimal. How did the author determine this number? It's tough enough to come up with the retirement aspect...now this?
Editor's Note:: According to Sunit Patel, senior vice president at Fidelity Consulting Services, the $225,000 figure is based on the total amount that an average 65-year-old couple retiring today today would need to cover health care expenses, and assumes a life expectancy of 17 years for a male and 20 years for a female. (This averages out to about $6,000 a year in today's dollars but will change from year to year based on a number of factors.) It includes:
- The monthly expenses associated with Medicare Part B and D premiums. The estimate assumes enrollment in the standard Medicare Part D prescription drug coverage.
- Medicare cost-sharing provisions, including co-payments, coinsurance, and deductibles for doctor office visits and outpatient services, for example, and excluded benefits for some preventive care, routine vision and hearing exams, etc.
- Prescription drug out-of-pocket expenses, including co-pays and amounts not covered by Medicare Part D that individuals must pay themselves when prescription costs exceed the annual threshold and until coverage resumes.