By Guest Blogger, Ross Blair, President and CEO of PlanPrescriber, Inc. (, which provides senior-friendly Internet comparison tools and resources for Medicare.

Ross Blair, CEO of

 This 2nd part of The Real Cost of Retirement will help future and current retirees better plan for and modify finances based on the rising cost of health care.

The standard 4 percent rule (William Bengen’s popular rule of thumb for retirement) shows that it may not hold up any more. Many Baby Boomers, seniors and their caregivers don’t account for the cost of health care and out-of-pocket expenses assuming Medicare is either free or covers the bulk of the cost. In planning to meet your future health care needs, understand the three basic ways for coverage: original Medicare; Medicare Advantage; and Medicare Supplements (also called MediGap).

  1. Original Medicare: This includes Medicare Part A and Medicare Part B (original Medicare), with a Medicare Part D (prescription drug) plan;
  2. Medicare Advantage: Also called Medicare Part C, Medicare Advantage bundles parts A, B and D into a single plan managed by a private insurance company. These plans can include vision, dental and other benefits.
  3. Medicare Supplements (also called MediGap): People who have original Medicare (Part A and Part B), can enroll in a separate MediGap plan to fill gaps in Original Medicare. It’s also recommended people enroll in a separate Part D plan.

Plan the Budge imageFigure out what you can afford. It sounds simple, but if you haven’t estimated what your retirement income will be, start doing that math before you enroll in Medicare.

Calculate your income after Social Security benefits, pensions, IRA and 401(k) savings, etc. Then, create a list of monthly expenses including rent, utilities and food, as well as other things like your prescription drug costs. Subtract your expenses from your income to develop a good sense of what you can afford to spend on Medicare on a monthly basis.

Finally, look at your savings and think about how big of a deductible you could afford if you had a large medical expense. Once you know what you can afford each month, and what you could afford in an emergency, you’re ready to start comparing plans.

Do side-by-side comparison. If you want to make the most of your health care dollars, get the broadest possible view of all of your Medicare options.

  • There are four parts to Medicare (A, B, C and D), plus ten Medicare supplements, each with their own costs, benefits and potential gaps. The only way to really know if you’ll be making an informed decision is to compare plans side-by-side and make sure you understand what you’ll pay each month and what you would have to pay in a worst-case-type of medical scenario.
  • The average Medicare beneficiary has 20 Medicare Advantage plans to choose from in their county. Rural counties average 13 plans, while urban counties average 22, according to Kaiser Family Foundation. Plans do vary by county due to cost and provider networks, so beneficiaries should review plan availability and benefits in their county by zip code.
  • In most states there are 10 standard types of Medicare Supplement plans, and about 20 percent of Medicare beneficiaries nationwide select this type of coverage. Each insurer decides how to set the premium for its Medigap policies. It can be set one of three ways: through community rating, issue-age rating or attained-age rating. How the premium is set will affect how much you pay now and in the future.
  • Comparing plans can be overwhelming, but there are online tools including and that can help simplify the process. Though it may seem overwhelming at first, taking the time to research your best option could really pay off and help ensure your nest egg will last as long as you need it.

We wrote about this issue last year, and included valuable information from Blair about strategies for maximizing your drug and health benefits. Baby Boomers know the key is to be proactive, reach out to experts who can help figure out what those opportunities are, and how to take advantage of them. One of the best resources for staying on top of healthcare news is the Henry J. Kaiser Family Foundation’s Kaiser Health News (KHN).

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