Health Care Costs

I have a couple questions on Health Care costs. I see that the program will estimate medicare part b costs when my wife and I are 65. I plan to retire at 62, so I assume I will need to calculate health care costs from 62 to 65 for me and for my wife until she is 65. Would these be special expenditures?

What would be the best resource to estimate these costs? I see AARP has a health care cost estimator, is that what others use or is there something better?

The program calculates medicare part b, does that include supplemental or advantage or do I need to calcuate those as special expenditures from 65 on? Also, on medicare part d. Is this also a special expenditure or is this figured in some how?

Thanks for your assistance. I think this is the last part I need to have my plan accurate.

Jim

Comments

dan royer's picture

I wouldn't call ESPlanner's Medicare Part B and "estimate" unless you estimated your earnings history. If you use your actual earnings history, then the Part B premium you see is an actual calculation--I believe it's based on the last two years of earnings. So if all that is entered correctly--and you should always enter your complete earnings history--then you'll get the correct Part B premiums. And, yes, for any supplemental like Part D you need to add that as special expenditures.

I did enter earning history, so it would not be an estimate. I did add supplemental with part d as a special expenditure. Of course that is an estimate based on todays cost. Same goes for health care once I hit 62. Are there any better resources than aarp, healthcare.gov and medicare website to estimate these costs?

Thanks for a great program.

dan royer's picture

Hmm. I'm not aware of anything particularly authoritative on these costs. But I suspect some googling around and you'll get some ideas for what to enter as Part D premiums. I would enter them as special expenditures in "today's dollars" so that the program assumes that the cost of this expense goes up each year with inflation.

Hi Dan,

I hope you can explain this to me. I'm currently 52 and retired. Wife is makes about 5K per year and will make that for the next 10 years or so. We are both eligible for Medicare at 65 and ESP has the cost at $5010 for the two of us. This is at age 66, the first full year of Medicare. By the time we are 87 the cost is up to $8786/year. I assume this is in 2017 dollars just like everything else in the plan.

My understanding is that the Medicare part B premium is max of $134 for 2017. That gives $268*12 or $3216 and not $5010, let alone $8700 in the year 2051. Any explanation? Note: our complete income history is in ESP and I maxed out SS the last 10 years of employment.

There's a setting under "Economic Assumptions", "Benefits" that shows "real current growth rate" for MPB premiums. That's almost certainly the main reason behind the growing numbers you see.

Best,
Brian

Hi Jim,

I went through a number of iterations on this over time with a bunch of research trying to do roughly the same thing. Before retirement it's tough because of the range of potential values.

One path is to try and get a quote for the following (if you want them) starting at age 65:

- Medicare Part D
- Medigap Policy "X"
- Dental
- Misc. expenses (e.g. not covered by other items that you include)
- Long-term care premiums
- Etc.

If you can get a rough estimate (and these can be wide), then put in a fairly high inflation rate (over and above normal inflation) and you can get a ballpark estimate.

You can back end the years 62-65 using a similar process. All of these (except for MPB) are special expenditures with Medical tax treatment.

Even easier, you could just put in a special expenditure of say $10,000 / year and be somewhat in the neighborhood. Again, that might be very different for your situation so you'd have to judge what seems most reasonable.

Best,
Brian

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