Healthcare in Retirement Could Cost You $165,000. Here Are 3 Smart Medicare Moves to Make it Less Expensive

Once you retire, you may find that a number of your expenses start to decline. You might spend less on transportation in the absence of a daily commute. And you might spend less on housing if your home gets paid off before retirement begins.

But if there's one expense that's likely to increase in retirement, it's healthcare. Not only does aging tend to bring about health issues, but you may find that your out-of-pocket costs as a Medicare enrollee are higher than you ever anticipated.

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Fidelity put out a recent estimate of what healthcare in retirement might cost the average 65-year-old today. And that number is an almost shocking $165,000.

It's also worth noting that that estimate does not take the cost of long-term care into account. That alone can be astronomical since Medicare won't pay for it.

The good news, though, is that the right Medicare moves on your part could leave you spending less on healthcare in retirement. Here are three worth making.

1. Sign up on time

Your initial Medicare enrollment period spans seven months, beginning three months before the month of your 65th birthday and ending three months after that month. If you don't enroll then, you'll have an opportunity to do so during Medicare's general enrollment period, which runs from Jan. 1 through March 31 each year. But if you miss your initial enrollment period, you could get stuck with surcharges on your Medicare Part B premiums.

Specifically, you'll pay an extra 10% for Part B for life per 12-month period you were eligible for coverage but didn't sign up. You're also at risk of surcharges for Part D if you go too long without prescription drug coverage.

So once your 65th birthday gets close, carve out the time to sign up for Medicare if you don't qualify for a special enrollment period. A special enrollment period applies if, at the time of your initial enrollment period, you're covered by a qualifying group health plan of 20 or more participants.

2. Participate in open enrollment each year

Each year, Medicare runs an open enrollment period that begins on Oct. 15 and ends on Dec. 7. During that time, you can switch Part D plans for better drug coverage or move from one Medicare Advantage plan to another. You can also dump Medicare Advantage completely if you can't find a plan you're happy with and move over to original Medicare (Parts A and B plus a Part D drug plan) instead.

Some people opt to sit out open enrollment because they find the process of comparing plan choices too overwhelming. And to be fair, it can be daunting.

But if you sit out open enrollment, you could end up paying more for coverage -- either in the form of higher premiums or higher out-of-pocket costs. Neither is ideal. So before you assume you can't manage the process of comparing plans, play around with Medicare's plan finder tool to narrow down your choices. The tool lets you enter information that's specific to you, like the prescriptions you take, to identify different plans that are available in your area along with their respective costs.

3. Get yourself supplemental insurance

You won't be eligible for a Medigap plan if you sign up for Medicare Advantage. But if you're enrolled in original Medicare, it could very much be worth it to buy supplemental insurance, or Medigap, early on.

A Medigap plan could help cover the cost of deductibles and coinsurance that apply to your care. For example, say you end up getting admitted to the hospital for a 65-day stay this year. In that case, you'll spend $1,632 for your first 60 days, and then $408 per day for the remaining five. But with Medigap, you may not have to pay that bill in its entirety.

The idea of spending $165,000 on healthcare throughout retirement may seem scary. But if you manage your Medicare enrollment wisely, participate in open enrollment each year, and secure Medigap coverage, you may find that your costs are pretty manageable.

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