Skip to content

    Important open enrollment and Medicare reminders

    October 07, 2022

    Allworth Co-CEO Scott Hanson shares his thoughts (and some eye-opening stats) as open enrollment season approaches. 

     

    After taxes, food, and shelter, healthcare will probably be the biggest expenditure of your life.

    Our internal audits also show that being able to afford high-quality healthcare is the top concern for most pre-retirees.1  

    It’s complex and the rules, costs, and coverages are ever changing.

    Always remember, it will save you money, time, and stress to organize your approach.

    That said, if you have questions about healthcare, you’re certainly not alone. The first thing you should do is reach out to your advisor. He or she can help you with your decision-making process and direct you to resources to help with your short- and long-term coverage needs while considering your overall financial plan and goals.

    Drum roll please: Open enrollment is here!

    For you readers who have yet to retire, identifying, choosing, and keeping the best, broadest, and most affordable healthcare coverage throughout your life is paramount.

    That said, depending on your industry and the type of insurance coverage you have (or want), for state and federal government employees, as well as the private sector, most of the healthcare open enrollment periods for 2023 are either already underway or about to commence.

    Generally lasting anywhere from just a few weeks to a couple of months, open enrollment periods are the dates through which you can either sign up for new coverage or alter or cancel an existing plan.

    But be forewarned: While the length of open enrollment periods may seem arbitrary, the dates are typically about as flexible as a marble countertop. Simply, if you’ve been eyeing a change to your health insurance coverage, don’t wait. If you miss the window to sign up or make that change, you are almost certainly out of luck until next year.

    How much does retirement healthcare really cost and what does Medicare cover?

    First, let me lay out some potential costs of retirement healthcare.

    Estimates vary, but while the typical person thinks they’ll end up spending about $41,000 out of pocket for healthcare during retirement, the actual estimated average expenditure per couple is likely going to be closer to $315,000.

    Why the disconnect?

    It’s primarily due to the fact that most people believe that once we turn 65, the Medicare fairy will take care of all our needs.

    While that’s not actually the case for more reasons than I could possibly list here, the fact is that many people simply don’t realize that Medicare coverage costs you money. In fact, due to inflation, Medicare Part B premiums rose 14.5% just last year. But on top of those costs and increases, Medicare also has coverage limits, as Parts A and B don’t come close to paying for all the things you’re likely going to need. (Your remaining healthcare expenses will either need to be covered by supplemental insurance or come out of pocket.)  

    Here’s a partial list of common healthcare needs that are not covered by Parts A or B:

    • Long-term care
    • Most dental
    • Eye exams
    • Regular physicals
    • Hearing aids

    While the above can add up (hearing aids alone average $4,000), long-term care is the big one, with seven out of ten of us likely needing care for a minimum of two years.3 (Women need long-term care for an average of almost four years.)

    So, how much does long-term care cost? The national average for in-home care is $5,000 a month, while the average cost of a private room in a nursing home facility has risen to $9,000 per.2

    And Medicare covers virtually none of it. (In simplest terms, if you break your hip and go to the hospital, Medicare will pay for it. But if afterwards, you can’t walk for a year and you need in-home assistance to shop, feed, clean, and clothe yourself, unless you have long-term care insurance, you’ll likely be responsible for paying it all on your own.)

    All that, and Medicare also has geographic limitations. That is, if you’re planning to move to say, Portugal, Spain, or Malta, (three of the most popular destinations for American expats) to take advantage of the (Malta aside) lower costs of living and the warmer winter weather, just remember that your Medicare coverage ends the instant you touch down across the pond.

    One additional caveat of Medicare is that it’s progressively taxed. That is, people with higher incomes are forced to pay more. How much? As soon as your modified adjusted grow income (MAGI) hits $182,000 (for joint filers), or $91,000 (for single filers), the Social Security Administration turns around and hits you with an additional premium known as an income related monthly adjustment amount (IRMAA).  

    So, there’s that.

    One last thing to keep in mind...

    I admit that I don’t enjoy writing articles like this as much as I do some others. That’s because the healthcare industry, and the government’s answer to it, are unwieldy and complex, and since they most certainly qualify as massive bureaucracies, they are full of frustrating inconsistencies.

    The intimidating fact is, that for those people who don’t plan, or for those who hit a string of bad luck, the healthcare abyss can be financially ruinous.

    Health and healthcare are indeed “the big unknowns” for every one of our financial futures. And while certainly some of you reading this can self-insure, for even most great savers – and because one big health emergency could be so expensive that it permanently alters the rest of your retirement – I regularly write about healthcare because helping you plan for it is a big part of what we do, and because it’s vitally important to understand just how much there is to know.

     

     

    1 Allworth Financial: The Healthcare Financial Factor

    2 Cost of Long Term Care by State | Cost of Care Report | Genworth

     3 How Much Care Will You Need? | ACL Administration for Community Living
    © 1993-2024, Allworth Financial. All rights reserved.

      Privacy Policy   |    Disclosures   |    Cookie Preferences   |    Do Not Sell or Share My Personal Information

       

      Advisory services offered through Allworth Financial, a Registered Investment Advisor | Disclosures | Privacy Policy

      Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Check the background of this firm on FINRA's BrokerCheck.

      HMRN Insurance Agency, LLC license #0D34087

      1Barron’s 2024 Top 100 RIA Firms. Barron's© magazine is a trademark of Dow Jones L.P. The ranking of independent advisory companies is based on assets managed by the firms, growth, technology spending, succession planning, and other metrics.

       2 Retention Rate Source: Allworth Internal Data, FY 2022

      3 The NBRI Circle of Excellence Award is bestowed upon NBRI clients meeting one or both of the following criteria: Total Company score at or above the 75th percentile of the NBRI ClearPath Benchmarking Database and/or improvement of five (5) or more benchmarking percentiles in Total Company score over the previous survey. 

      4 As of 7/1/2024, Allworth Financial, an SEC registered investment adviser and AW Securities, a registered broker/dealer have approximately $22.5 billion in total assets under management and administration. 

      5 InvestmentNews 2020 and 2021 Best Places to Work for Financial Advisers. The ranking reflects survey responses and scores completed by both employers and employees. Employers report their organization’s workplace policies, practices, and demographics. Employees complete a survey designed to measure the employee experience. 

      6  2021 Value of an Advisor Study / Russel Investments

      7 Ranked 9th Top Wealth Managers By Growth in Assets in the U.S. from RIA Channel, 2022. RIA Database and RIA Channel are registered trademarks owned by Labworks, LLC.

      8 USA Today Best Financial Advisory Firms 2024. The ranking is based on the growth of the companies’ assets under management (AUM) over the short and long term and the number of recommendations they received from clients and peers.

      9 NBRI Best in Class Ethics 2023. The Best in Class level is bestowed upon clients performing at or above 90 percentile of the NBRI ClearPath Benchmarking Database.

      ✢ Scott Hanson, Investment Advisor 2005, 25 most influential people in the financial services industry. The ranking reflects 25 people who Investment Advisor magazine believes have had or will have the greatest influence on the financial services industry.

      ✼Pat McClain, InvestmentNews 2014, Invest in Others Community Service Award, presented to an advisor who has made an outstanding impact on a community through managerial contributions to a non-profit organization.

      †Financial Times, FT 300 Top Registered Investment Advisers, June 2019. The ranking reflects six areas of consideration including the company's years in existence, industry certifications of key employees, AUM, asset growth, SEC compliance record and online accessibility and calculates a numeric score for each company. 

      Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

      Important Information

      The information presented is for educational purposes only and is not intended to be a comprehensive analysis of the topics discussed. It should not be interpreted as personalized investment advice or relied upon as such.

      Allworth Financial, LP (“Allworth”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of the information presented. While efforts are made to ensure the information’s accuracy, it is subject to change without notice. Allworth conducts a reasonable inquiry to determine that information provided by third party sources is reasonable, but cannot guarantee its accuracy or completeness. Opinions expressed are also subject to change without notice and should not be construed as investment advice.

      The information is not intended to convey any implicit or explicit guarantee or sense of assurance that, if followed, any investment strategies referenced will produce a positive or desired outcome. All investments involve risk, including the potential loss of principal. There can be no assurance that any investment strategy or decision will achieve its intended objectives or result in a positive return. It is important to carefully consider your investment goals, risk tolerance, and seek professional advice before making any investment decisions.