Editor's Note: This story originally appeared on NewRetirement.
Knowing you are eligible for Medicare at age 65 may give you some peace of mind about retirement health care costs, but you may be surprised to find out that you’ll still be paying a lot out of pocket.
While Medicare premiums are fairly predictable, tests and procedures that aren’t covered, unexpected health crises, and prescription drug costs can throw a wrench in even the most carefully laid retirement plans.
To help you out, we’ve assembled these tips for saving on retirement health care costs.
1. Do Your Research on Medicare Plans and Supplements
Do you know what Medicare Part A, B, C, and D cover? Should you purchase a Medicare supplemental plan to cover additional tests, items, or services that Medicare doesn’t pay for? There are two main ways to get your Medicare coverage: Original Medicare (Parts A and B) or a Medicare Advantage Plan (Part C). You can also add prescription coverage with Part D.
Of course, each option has different premiums, co-pays, deductibles, and coverage limitations. Buying bare-bones coverage may save you money on premiums, but cost more in the form of greater out-of-pocket costs for uncovered services and prescriptions. Alternatively, if you are in excellent health, you could be better off passing on the additional expense of an Advantage Plan or prescription coverage rather than paying for coverage that you don’t use.
That’s why it’s important to take the time to do your research and pick the right plan for you. Compare plans right now to potentially save you a lot of money in the long run.
Did you know that the NewRetirement Planner can help you estimate your retirement healthcare coverage? Get a personalized assessment based on your health and ZIP code. Play with the tool. Try different kinds of coverage to estimate your total out-of-pocket costs.
2. Assess Your Supplemental Coverage Every Year
It is not enough to research your Medicare supplemental plans just once when you sign up. You will want to assess your coverage once a year during the open enrollment period. Your health needs will evolve and plans change every year.
3. Check Out Non-Insurance Options
Medicare does not cover most vision and dental services. You may be able to save on those services with a discount plan. Non-insurance discount plans are typically offered by banks, unions, nonprofit organizations, or even directly by a discount company. In exchange for a set monthly fee, you receive discounts ranging from 20% to 60% on many of the services not covered by Medicare.
Be sure to do your research on any discount plan before signing up. While there are many legitimate discount plans, others take people’s money and offer very little in return. Look out for programs that promise “up to” a certain percentage off. Often, they promise “up to” 70% off, but in reality, the average discount is much lower.
Also, be sure to call your regular doctors and providers to find out if they participate in the discount plan. Some dishonest plan promoters promise a long list of providers when few local doctors actually participate.
4. Cut Your Prescription Costs
Even with supplemental coverage, prescription copays can add up. To save money, discuss your concerns with your doctor. Ask if they will prescribe a less expensive alternative or a generic.
Whatever your doctor prescribes, shop around to fill your prescription. Filling the same prescription at Costco versus CVS could save a lot. Ordering a 90-day supply online may save you even more.
5. Go to a Local Dental School
Dentistry schools offer high-quality care for a fraction of what you would pay a traditional dentist’s office. All work is performed by students under the supervision of an instructor, and their tools and equipment are very current.
Keep in mind that their services may take more time, and there could be a waiting list to get in. However, for routine and non-emergency dental work, choosing a local dental school could save a significant amount on out-of-pocket dental care. Visit the American Student Dental Association to find a clinic in your area.
6. Save on Eyeglasses
When you update the prescription for your eyeglasses, ask your optometrist about keeping your current frames if they are in good condition. Frames often account for nearly half the cost of a new pair of glasses, so reusing them can keep the price down significantly.
If your old frames are not useable, save money by skipping the designer brands for generic frames or ask your doctor for close-out specials and discontinued models that might be available at a lower cost.
You may also be eligible for discounts from national retailers such as LensCrafters, Pearle Vision, Sears Optical, or other retailers with an AARP or AAA membership. If you’re already paying for those memberships, call to ask about membership benefits and take advantage of any savings for which you are eligible.
7. Double-Check Your Medical Bills
Research from Medliminal estimates that 90% of medical bills have errors. Other studies put the frequency of mistakes between 20%-50%. Either way, it is worthwhile to pay attention.
While many of us tend just to pay whatever the hospital or doctor’s office says we owe, we should review bills as closely as we would a bill from a restaurant or retail store.
Prescription drugs and medical procedures are billed based on codes, so a simple error could wind up being a costly mistake. Double-check each bill and explanation of benefits.
If it looks as if you are being charged for tests and services you didn’t receive, call your provider to ask questions and get clarification.
8. Avoid the Emergency Room
A visit to the ER, even when covered by Medicare, means larger deductibles and copays. For non-emergency medical situations, try to find a nearby urgent care center through BestUrgentCareDirectory.com.
Alternatively, visit a clinic at a local CVS or Walgreens. Both of those drugstore chains provide a list of services and price ranges online. They typically do not require an appointment, and the medical professionals there often can provide the care you need for less time and money than you would spend on a trip to the ER.
9. Be a Bargain Shopper
Does more expensive treatment mean better care? Typically, the answer is no, but many people don’t realize that health care costs can vary significantly among providers for the same service. It can be difficult for patients to determine the amount they will pay for a given test or procedure, but many people are calling for greater transparency in health care, so they can clearly see the price of a procedure and know how much they will pay out-of-pocket before seeking medical care.
You can become more informed about the cost of medical and dental procedures in your area using FAIR Health’s Consumer Cost Lookup tool. You can also contact providers and ask for a quote to shop around for a lower price for a particular procedure.
10. Use a Health Savings Account (HSA)
While you’re still working, if you are eligible to contribute to an Health Savings Account (HSA), take advantage of it. Your contributions are made pre-tax, the money in your account grows tax-free, and you can withdraw funds from the account at any time tax-free, as long as the money is used for qualified medical expenses.
Many people confuse HSAs with Flexible Spending Accounts (FSAs), but FSAs typically have “use it or lose it” rules that require you to use the funds in your account within a particular timeframe. However, HSA accounts are portable. The account belongs to you, even if you leave your employer, and the funds remain in your account until you need them. Putting money aside while you’re working can cut your tax bill now and save on medical expenses for retirement when you might need those savings the most.
11. Prevention Is the Best Medicine
If you are in good health, you’ll spend less on retirement health care costs.
Engage in regular exercise and follow a healthy diet to keep the pounds off and keep your blood pressure at a lower level. Cutting out alcohol and cigarettes can also help you avoid possible medical conditions and expenses in the future.
Of course, a healthy lifestyle can’t prevent every medical condition, so take advantage of the wide range of immunizations and preventive screenings that your health insurance provider or Medicare offer for free.
12. Be Prepared So You Don’t Go Into Debt Paying for Medical Care
According to Fidelity Investments, a 65-year-old couple who both retired in 2021 can expect to spend $300,000 in out-of-pocket health care and medical expenses throughout retirement.
Factor those retirement health care costs into your retirement plan. Budgeting for those expenses, being an informed consumer, and taking care of your health are all actions that you can start making today that will benefit you now and in retirement.
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