Wednesday, May 23, 2012

Retirement Planning - Health Care

The company I work for peppers us with emails on various subjects on a daily basis. Today's was "Your Financial Welbeing newsletter". The first article started with this line:

The average annual cost of healthcare for families of four in the U.S. is $20,728.

Now, as someone nearing retirement, I have some interest in this subject beyond learning how much mre it's going to cost me when the annual enrollment period rolls around. So I decided to poke around a little.

Here in the USA, once I hit 65, I'll be eligible for Medicare. You'll often hear Medicare called an entitlement, but when people use that term, they leave off the important qualifier: "earned". Nearly everyone who works for a paycheck has been paying for their Medicare since day one (including those mysterious people who allegedly "pay no taxes"). Anyway, Medicare has four parts:
  • Part A - Hospital Insurance
  • Part B - Medical Insurance
  • Part C - Medicare Advantage - a deal that lets you get all your Part A & B benefits from one provider
  • Part D - Prescription drug coverage
Medicare Part A is "free" - it's been paid for by a lifetime of payroll deductions.
Medicare Part B has a monthly premium - for 2012 it's $99.90.
Medicare Part C may have an additional premium depending on where you live.
Medicare Part D has a premium, but it can range from a few dollars to about $50 a month.

(The AARP has an extensive discussion of the various Medicare parts and options here.)

So for the sake of argument let's estimate a mid level Part D plan as $25, add in the Part B premium and we get a monthly total of $124.90 or $1498.80 per year. That's nearly one whole Social Security check. And that's per person, so a married couple will pay twice that.

On the other hand, if I were to retire in the EU, say for example Italy, I'd pay 387.34 Euros or $486.81 for everything. Not surprisingly, one of the blogs I follow is by a woman who has done exactly that. When she was downsized out of a job a few years ago she found that could not get any health insurance because she had a pre-existing condition: Lupus. Today the Affordable Care Act makes it possible (for now) for people like her to get insurance, albeit at a very high cost. Her site An American in Italy is one of the very few places it's possible to find actual experiences with EU style health care and  the various visas and permits required to retire in Europe. It's well worth a look if you've thought about retiring overseas.

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