Budget for post-65 health/dental/vision/hearing

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NoHeat
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Budget for post-65 health/dental/vision/hearing

Post by NoHeat » Wed Oct 17, 2018 7:56 pm

For planning a retirement budget, numbers are hard to find for a total cost for health care. What I've found so far is a range for a 65-year-old:

$5206 to $9552/yr woman
$5095 to $9441/yr man

Supposedly that includes Medicare B, D, Supplement, dental insurance, hearing, & vision, as well as out-of-pocket for: doctor, hospital, tests, prescriptions, dental. That's from Dana Anspach's 2016 book "Control your retirement destiny", 2nd Ed., p. 290. Anspach got those numbers from a apps.hvsfinancial.com/hvadvisor (which is not accessible to me, so I can't use it to find numbers for other ages, etc.).

Anybody have better numbers to use?

sawdust60
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Re: Budget for post-65 health/dental/vision/hearing

Post by sawdust60 » Wed Oct 17, 2018 11:08 pm

I don't have a concern with those numbers. But consider how much variation there will be, and then combine health with travel and perhaps other discretionary items. What I did was look at what a max out of pocket number might be, and assume that anything less would be added to the travel budget.

sawhorse
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Re: Budget for post-65 health/dental/vision/hearing

Post by sawhorse » Wed Oct 17, 2018 11:40 pm

You might also think about costs for long term care, should you need it. Nursing homes are very expensive.

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Sheepdog
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Re: Budget for post-65 health/dental/vision/hearing

Post by Sheepdog » Wed Oct 17, 2018 11:57 pm

We are a retired couple, ages 84 and 77 at the end of 2017. I can give you our costs.

Our out of pocket medical expenses for the last 8 years are listed in each category are:
(First amount shown is for 2010, followed by 2011, 2012, 2013, 2014, 2015, 2016, 2017}

Medical insurance premiums [Medicare ('paid from SS deduction), Medigap, Part D prescription and Medicare Advantage plans (me in 2014-17 and spouse 2016-17: $6830, $7033, $8037, $8943, $6436, $6436, $4135, $4691

Dentist (uninsured): $220, $2962, $2977, $1576, $2500, $2981, $413, $2209

Physicians: $1583, $162, $66, $111, $296, $464, $725, $1048

Prescription Medicines: $685, $808, $62, $140, $279, $426, $1293, $2755

Misc (eyes, lab, hearing, chiropractor) mostly uninsured $532, $2545, $248, $2577, $0, $1107, $1276. $1947

Hospital and surgical $0, $906, $0, $0, $0, $424, $0, $214

TOTAL OUT OF POCKET MEDICAL EXPENSES FOR THIS RETIRED COUPLE: 2010 $9,850, 2011 $14,416, 2012 $11,290, 2013 $13,347, 2014 $9,511, 2015 $11,838, 2016 $7,842, 2017 $12,864


COMMENTS: I purchased a Medicare Advantage plan (Anthem BC/BS for me only in 2014.. My wife remained with Medicare and Medigap until 2016 when she also purchased a Humana Advantage plan.) You can see the resulting lower insurance costs starting in 2014, They are saving us over $4000 per year.

Uninsured dentist expenses are much higher than 10 years ago.

Hearing aids (uninsured) for me started in 2011. I have purchased two (in 2011 and 2013) at a cost of over $2000 each. Replacement aids were purchased in 2017, but all covered by my Advantage Plan.

Most of our medications had been generic until 2016 when my wife had to purchase 2 expensive name brands.

NOTE addition: Looking at 2018, thru September because of medical problems and dental work for both of us, our costs are already:
Dental $7580
Prescription $2635
(My Advantage plan has paid out tens of thousands already, but my out of pocket expense has been remarkably low)
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

cas
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Re: Budget for post-65 health/dental/vision/hearing

Post by cas » Thu Oct 18, 2018 6:46 am

NoHeat wrote:
Wed Oct 17, 2018 7:56 pm

Supposedly that includes Medicare B, D, Supplement, dental insurance, hearing, & vision, as well as out-of-pocket for: doctor, hospital, tests, prescriptions, dental. That's from Dana Anspach's 2016 book "Control your retirement destiny", 2nd Ed., p. 290. Anspach got those numbers from a apps.hvsfinancial.com/hvadvisor (which is not accessible to me, so I can't use it to find numbers for other ages, etc.).

Anybody have better numbers to use?
A while back on bogleheads, there was discussion of a 2017 paper also published on the hvsfinancial website. I don't know if it has the same information as what appears to be an app that you reference above, but it has quite a bit of information. (First post in the boglehead's thread has a link to the actual paper.) I seem to recall that this thread had its fair share of people commenting who had obviously never read the paper, so let the reader beware.

Boglehead's thread: "Expect to spend 2.6M on healthcare?" viewtopic.php?f=2&t=225601

I don't know if it is better, worse, or indifferent as far as "better numbers" but Vanguard also recently put out a relevant white paper: "Planning for health care costs in retirement", June 2018, https://pressroom.vanguard.com/nonindex ... 061918.pdf
Retiree health care costs vary from person to person.
Financial plans should factor in the personal
characteristics of each retirement investor. Factors that
can significantly affect costs include:
• Health status and risk.
• Medicare coverage choice.
• Retirement age.
• Employer subsidies.
• Geography.
• Medicare surcharges.
In the following sections, we discuss each
factor individually.

RudyS
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Re: Budget for post-65 health/dental/vision/hearing

Post by RudyS » Thu Oct 18, 2018 10:13 am

Sheepdog wrote:
Wed Oct 17, 2018 11:57 pm
We are a retired couple, ages 84 and 77 at the end of 2017. I can give you our costs.

Our out of pocket medical expenses for the last 8 years are listed in each category are:
(First amount shown is for 2010, followed by 2011, 2012, 2013, 2014, 2015, 2016, 2017}

Medical insurance premiums [Medicare ('paid from SS deduction), Medigap, Part D prescription and Medicare Advantage plans (me in 2014-17 and spouse 2016-17: $6830, $7033, $8037, $8943, $6436, $6436, $4135, $4691

Dentist (uninsured): $220, $2962, $2977, $1576, $2500, $2981, $413, $2209

Physicians: $1583, $162, $66, $111, $296, $464, $725, $1048

Prescription Medicines: $685, $808, $62, $140, $279, $426, $1293, $2755

Misc (eyes, lab, hearing, chiropractor) mostly uninsured $532, $2545, $248, $2577, $0, $1107, $1276. $1947

Hospital and surgical $0, $906, $0, $0, $0, $424, $0, $214

TOTAL OUT OF POCKET MEDICAL EXPENSES FOR THIS RETIRED COUPLE: 2010 $9,850, 2011 $14,416, 2012 $11,290, 2013 $13,347, 2014 $9,511, 2015 $11,838, 2016 $7,842, 2017 $12,864


COMMENTS: I purchased a Medicare Advantage plan (Anthem BC/BS for me only in 2014.. My wife remained with Medicare and Medigap until 2016 when she also purchased a Humana Advantage plan.) You can see the resulting lower insurance costs starting in 2014, They are saving us over $4000 per year.

Uninsured dentist expenses are much higher than 10 years ago.

Hearing aids (uninsured) for me started in 2011. I have purchased two (in 2011 and 2013) at a cost of over $2000 each. Replacement aids were purchased in 2017, but all covered by my Advantage Plan.

Most of our medications had been generic until 2016 when my wife had to purchase 2 expensive name brands.

NOTE addition: Looking at 2018, thru September because of medical problems and dental work for both of us, our costs are already:
Dental $7580
Prescription $2635
(My Advantage plan has paid out tens of thousands already, but my out of pocket expense has been remarkably low)
Ages 82 and 77 here. While our details are a bit different, the totals are not far off. We have Medicare plus Medigap plans F and N. Biggest differences would be hearing aids (need or not), and dental work (crowns or not) and special prescriptions. Those factors are pretty individual.

2015
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Re: Budget for post-65 health/dental/vision/hearing

Post by 2015 » Thu Oct 18, 2018 11:19 am

Timely and useful post from Kitces yesterday:

https://www.kitces.com/blog/vanguard-me ... ojections/
Last edited by 2015 on Fri Oct 19, 2018 11:35 am, edited 1 time in total.

NoHeat
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Re: Budget for post-65 health/dental/vision/hearing

Post by NoHeat » Thu Oct 18, 2018 11:54 am

Sheepdog wrote:
Wed Oct 17, 2018 11:57 pm

TOTAL OUT OF POCKET MEDICAL EXPENSES FOR THIS RETIRED COUPLE: 2010 $9,850, 2011 $14,416, 2012 $11,290, 2013 $13,347, 2014 $9,511, 2015 $11,838, 2016 $7,842, 2017 $12,864
Thank you, Sheepdog. It's really helpful to see a real-life example, with real expenses. It’s great that you included dental, hearing and vision. The variations, and the reasons for the variations, is also very helpful to see.

I take it that "total out of pocket" includes both insurance premiums and costs that are not paid by insurance?
Last edited by NoHeat on Thu Oct 18, 2018 12:49 pm, edited 2 times in total.

NoHeat
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Re: Budget for post-65 health/dental/vision/hearing

Post by NoHeat » Thu Oct 18, 2018 11:55 am

2015 wrote:
Thu Oct 18, 2018 11:19 am
Timely and useful post from Kitces yesterday:
Thank you, that is helpful.

It's based on a Vanguard report (to find the pdf file, search for "Planning for health care costs in retirement" "June 2018" Vanguard). Excerpts:

The Mercer-Vanguard health care cost model divides people into three risk categories: high, medium, and low. High-risk individuals are assumed to incur health care costs associated with those in the top quartile. Typically, high-risk individuals in our model are smokers, visit the doctor frequently, or have two or more of the chronic conditions listed above. Low-risk individuals are generally free of chronic conditions ...

Our model suggests that a medium-risk 65-year-old woman living in a median-cost area, using only traditional Medicare with Part D, could expect to pay between about $3,200 and $6,600 for premiums and out-of-pocket medical, dental, and vision costs in 2018 (Figure 1). At the median, she could expect to pay about $3,900. ... On the other hand, a high-risk individual would expect costs to be over 90% higher, with the possibility that expenses in some years would exceed five times the medium-risk baseline.

Here's Figure 1 from the Vanguard report (which Kitces has branded with his own copyright symbol):

Image

There are three data points, for three risk levels. It’s unclear to me whether hearing and vision are included in those costs for a 65-year-old — I’m guessing most women of that age do not yet have hearing expenses.

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Sheepdog
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Re: Budget for post-65 health/dental/vision/hearing

Post by Sheepdog » Thu Oct 18, 2018 2:53 pm

NoHeat wrote:
Thu Oct 18, 2018 11:54 am
Sheepdog wrote:
Wed Oct 17, 2018 11:57 pm

TOTAL OUT OF POCKET MEDICAL EXPENSES FOR THIS RETIRED COUPLE: 2010 $9,850, 2011 $14,416, 2012 $11,290, 2013 $13,347, 2014 $9,511, 2015 $11,838, 2016 $7,842, 2017 $12,864
Thank you, Sheepdog. It's really helpful to see a real-life example, with real expenses. It’s great that you included dental, hearing and vision. The variations, and the reasons for the variations, is also very helpful to see.

I take it that "total out of pocket" includes both insurance premiums and costs that are not paid by insurance?
You are most welcome. Yes it includes all medical insurance premiums, including[Medicare ('paid from SS deduction), Medigap, Part D prescription and Medicare Advantage plans (me in 2014-17 and spouse 2016-17
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

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dm200
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Re: Budget for post-65 health/dental/vision/hearing

Post by dm200 » Thu Oct 18, 2018 3:01 pm

My wife and I are both on a Kaiser Medicare plan. We each pay $134 for Medicare part B and $30/month to Kaiser. in 2019, our primary care office visit copay is actually going down from $20 to $10, while we will pay more to Kaiser in 2019 ($36 per month) and more to part B ($135.50). Our plan includes the drug benefit.

Our Kaiser plan includes (for $20 copay) Optometrist visit and refractions for current/update for glasses prescriptions.

Depending on all the details, a Medicare Advantage plan can be more cost effective than Original Medicare plus supplement plus Part D. Most, but not all, Advantage plans include drugs. In 2019 our plan will also include gym access through Silver Fit. Our plan also includes a small discount on dental care from participating dentists.

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