Five Steps You Can Take Now to Maximize Your Healthcare Later

3 minute read

Healthcare expenses are the number one cause of household bankruptcy. And, as people age, out-of-pocket costs can overwhelm pensions, Social Security, and investments.

– Jae Oh in “Maximize Your Medicare

Confused by Medicare, Medicaid, Medicare Advantage or other healthcare plans for retirement? Trust us – you’re not alone. With multiple coverage options, unclear enrollment deadlines and myriad qualifying expenses, navigating the American healthcare system and understanding all of your options can be confusing and daunting.

But it’s vitally important, as healthcare costs – both planned and unplanned – can become one of the biggest threats to your retirement solvency. According to Fidelity, about 15% of the average retiree’s annual expenses will be used for costs related to healthcare. Previous research has also shown that confusion surrounding health insurance can lead individuals to choose more costly coverage and delay or even avoid medical care.

WATCH Your Money Map: Investing Now For your Future Healthcare

Jae Oh, financial planner and author, joined Jean Chatzky on Your Money Map to discuss healthcare planning for retirement on September 8, 2021.

Here are five steps you can take now to ensure you have the right healthcare coverage and protect your retirement.

  • Determine where, how and when you need to enroll: No matter what state you live in, you can enroll in affordable, quality health coverage. To shop for insurance, use the federal exchanges information on or look up your state’s individual marketplace (14 states, plus the District of Columbia, currently run their own exchanges). The federal exchange open enrollment runs through mid-December, but you might have more time if you have a state-run exchange.
  • Understand your options: Have a clear and thorough understanding of the health insurance coverage offered and make sure to review it annually. Whether your plan is offered through the Affordable Care Act, private health insurance, Health Savings Accounts (HSAs), Medicare, med-sup policies and/or an annuity with a long-term care enhancement, it’s important to be up-to-date with its terms and conditions. Every year, slight changes occur that can impact the types of plans available and their related costs. By reviewing your plan and its terms regularly, you’ll be able to see any shifts and properly budget for your deductibles, co-payments and co-insurance.
  • Consider an HSA: Unlike a Flexible Spending Account, money in an HSA is not “use-it-or-lose-it.” They are federally tax-deductible funds and can reduce your taxable income. Sometimes employers may even contribute funds to it on your behalf. Like some tax advantaged retirement accounts, HSAs allow you to make pre-tax contributions in an interest-bearing account or investment portfolio, and you can make tax-free withdrawals at any time to cover qualified health care expenses.
  • Discuss the elephant in the room: No one likes discussing topics like illness and end-of-life care but creating a plan before you need one can help you and your family mitigate any stress and unforeseen medical issues and expenses in the future. One good option is to use an annuity that guarantees an income for life and can help combat multiple risks. It can also help supplement the gap left by other sources of guaranteed income, such as Social Security or, if you’re lucky to have one, a pension. Some annuities even include an option that allows you to withdraw money without paying early withdrawal fees if you or your spouse becomes seriously ill.
  • Speak with your financial professional: The multitude of health insurance choices and features can be overwhelming. The right financial professional can make sure your plan considers all of your essential expenses, including your healthcare costs, and determine if and how protected income can help you Check Off the Basics.

Stay informed with the latest updates on protected income planning.