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A Guide to Healthcare Costs for Seniors

A State Of Mind And Body

Managing finances can be stressful for anyone, but the stakes are especially high for older adults. According to a 2023 study by the National Council on Aging, 80% of Americans aged 60 and older experience financial struggles or are at risk of future economic insecurity. These financial challenges can greatly impact older adults’ quality of life. 

Healthcare expenses are one of the top concerns for many older adults. A 2022 Gallup poll found that 42% of adults over 65 feel stress in their daily lives due to medical costs. Healthcare for seniors often includes long-term care, specialist visits, surgeries, and other costly services. Even small expenses like prescription medications can add up over time and strain your budget. 

Understanding medical costs can help you plan and budget for today and the future. This guide explores the average healthcare cost for seniors and strategies to manage or reduce these expenses. 

Understanding Elderly Healthcare Costs

Elderly healthcare costs refer to the financial expense of medical goods and services for older adults. Many older adults pay for some or all these costs from their personal savings. Others rely on government programs, private insurance, family members, and other sources of financial support. 

Direct elderly medical costs include: 

  • Diagnostic testing 
  • Doctor visits
  • Hospital stays
  • Long-term care
  • Mobility aids 
  • Physical therapy 
  • Prescription medications

Many older adults and their families also have indirect healthcare costs. For example, you may need to fill up your gas tank to drive to an appointment with a specialist and pay for parking. If your health affects your mobility, your home might need costly modifications to make it easier for you to get around. Plus, family caregivers often take time off work to help elderly loved ones, which may lead to lower productivity and income. 

It’s normal to spend more money on healthcare as you get older. Older adults often develop cataracts, dementia, diabetes, osteoarthritis, and other common aging-related conditions. They’re also more likely to experience multiple conditions simultaneously. As a result, doctors may recommend more complex and pricier treatments. 

Additionally, aging can lead to geriatric syndromes, which include frailty, delirium, urinary incontinence, and falls. Older adults who develop these conditions may need to pay for daily assistance from trained professionals, assistive devices, and other types of support. 

Planning and Budgeting for Healthcare Costs

It’s no secret that healthcare costs are high in America. A trip to the emergency room or a simple surgery can cost thousands of dollars if you’re uninsured. Fortunately, there are several ways to budget for healthcare costs. 

Most Americans qualify for Medicare once they turn 65. This federally funded health insurance has four parts with varying costs. Part A covers inpatient hospital stays and typically has a $0 premium, but you’ll need to pay a $1,632 deductible every time you’re admitted to the hospital per quarter. Part B includes medical insurance, and the premiums start at $174.70 monthly with a $240 annual deductible. 

Medicare also offers several types of supplemental coverage. The Medicare Advantage Plan (Part C) has varying premiums and covers 100% of health expenses once you reach an annual out-of-pocket maximum. Part D covers prescription medications and has different premiums based on plan and income. Finally, Medigap is supplemental insurance that reduces your share of costs for Part A and Part B services. 

In addition, you may be eligible for Medicaid if you have a low income. This program can help you pay for Medicare premiums and out-of-pocket healthcare costs. It also covers additional services, including eyeglasses, prescription medications, and certain types of long-term care. 

Finally, you can save for healthcare expenses with a 401k, Roth IRA, and health savings account before you retire. Many finance websites have free calculators that you can use to estimate future healthcare costs and other retirement expenses.  

Average Healthcare Costs for Seniors

According to Fidelity Investments’ annual Retiree Health Care Cost Estimate, a 65-year-old who retired in 2023 will spend an average of $157,500 on healthcare expenses throughout their retirement. These estimates assume older adults have enrolled in Medicare Part A and Part B. People who don’t have this coverage may have higher costs. 

The cost of specific medical services varies widely based on insurance coverage, geographic location, and other factors. For example, a three-day hospital stay costs an average of $30,000. However, older adults with Medicare Part A may only need to pay their $1,632 deductible. 

Additionally, Americans pay an average of $80 to $170 per doctor’s visit. This estimate doesn’t include diagnostic tests or procedures, which will increase the price. However, costs can differ dramatically, so it’s best to consult your insurance provider for the most accurate estimates. For instance, the Medicare website has a price lookup tool that you can use to research the cost of specific outpatient procedures. 

Long-term care is another common expense for older adults. According to the National Council on Aging, assisted living costs an average of $4,500 monthly, while memory care costs $6,160 monthly. 

Ways to Lower Healthcare Costs

The cost of healthcare may seem daunting, but there are many practical ways to reduce your expenses. 

Preventative services help you avoid illnesses and catch developing health conditions early. Examples of preventative care include: 

  • COVID-19 vaccines 
  • Flu shots 
  • Glaucoma tests 
  • Mammograms 
  • Nutrition counseling 
  • Prostate cancer screenings 
  • Tobacco cessation counseling 

Some organizations offer healthcare discounts for seniors. For example, the free AARP Prescription Discounts program allows older adults to save money on prescriptions at over 66,000 pharmacies. AARP members can also take a free hearing test by phone, get discounts on prescription eyewear, and more. 

Many older adults also take advantage of community resources. Some communities have senior centers where you can take fitness classes, participate in wellness programs, and socialize with peers. Local organizations may also host health clinics and preventative screenings. These events allow you to receive basic medical services for free or at steeply discounted rates. 

Additionally, many organizations offer support groups and other services. You might attend grief counseling at a local church or have a volunteer group install grab bars in your bathroom. These services can help you maintain independence and improve your well-being without draining your bank account. 

Long-Term Care Planning

A retirement community can be the perfect place to enjoy your golden years. Many communities offer dozens of amenities, such as art classes, on-site restaurants, social events, and swimming pools. These services can help you stay active and fulfilled as you age. Plus, a retirement community has attentive staff who can provide medical care and other support. 

Planning for your long-term care needs will help you find the right retirement communityLong-term care insurance is one of the best ways to prepare for this expense. This insurance may pay up to a designated monthly amount for long-term care or cover a certain number of years of care. For example, you could choose a plan that covers $5,000 per month for assisted living or 10 years of care. 

Additionally, many older adults use their retirement savings or rely on family to pay for some or all of their long-term care expenses. This option could allow you to choose a retirement community that fits your personality and needs perfectly. 

People who exhaust their assets may qualify for long-term care through Medicaid. The Department of Veterans Affairs also covers long-term care for eligible veterans. 

End-of-Life Healthcare Costs

Planning for the end of your life can seem morbid and scary. However, making these arrangements beforehand ensures you receive the best care when the time comes. These plans can also give you and your loved ones peace of mind. 

Medicare Part A covers hospice care for people with terminal illnesses. This service allows you to receive holistic care from healthcare professionals in your home. However, you’ll still need to pay for room and board if you stay in a retirement community. Many private health insurance companies also offer hospice benefits. 

You can also use several strategies to plan for your funeral expenses. Life and burial insurance plans can cover coffins, funeral services, and other costs. Additionally, many funeral homes allow you to plan and pay for your funeral ahead of time. This option lets you make your ideal arrangements so your loved ones can celebrate your life as you intended. 

Enjoy a More Peaceful Retirement With Financial Planning

Healthcare for seniors can be expensive, especially if you need long-term care or specialized treatments. But you don’t need to win the lottery to afford medical care in your golden years. Financial planning allows you to prepare for these costs so you can receive the care you need as you age. 

There are numerous ways to set yourself up for financial security. Many older adults rely on Medicare, Medicaid, and supplemental insurance to cover essential medical services. You can also take advantage of community resources and preventative care. 

Joining a retirement community can help you stay healthy and access medical services. Some people use long-term care insurance to cover these costs, while others rely on Medicaid or private savings. Senior Resource Group can help you explore your options and determine if one of our communities fits your budget and needs. Contact us today to learn more.