The Cheapest States to Reside in for Medicare Costs

For most of us who are heading into retirement, we can expect to turn towards Medicare to be the sole provider for our health insurance, a benefit that our parents and grandparents have enjoyed for the past five decades.

Or can we?

We are all aware have that Medicare has expenses, but what are those costs, and do they vary depending on where we live?

The cost breakdown for Medicare can be fairly simple for healthy individuals; here is a brief synopsis for subscribers, who are eligible at 65 (for those still employed or with health conditions please see medicare.gov for more information):

Part A – (Hospitalization) Everyone receives it and it is technically free, but there is a $1,100 annual deductible.

Part B – (Medical Coverage) Most people will pay the standard premium amount of $155.40 a month. Social Security will contact some people who have to pay more depending on their income

Part D – This is the prescription drug plan, the costs can be as low as $10 a month to $150 a month or higher. It depends on the amount of prescriptions that will be needed, which plan provides them, and whether the “donut hole” will be closed under the new healthcare plan.

Part C or Supplemental Insurance – This fills in the “gaps” that are left from Medicare. These policies can cover all the deductibles and co-pays that come with Medicare, and can also cover medications as well. T

So with these costs, deductibles and co-pays, are some states cheaper to live in than others?

First, we will take into consideration the overall costs of Medicare Part B, which is standard, Medicare Part D, which does fluctuate, a supplemental MediGap Plan C policy also fluctulates, and finally, the average out-of-pocket costs for services that Medicare does not cover (for what is covered & not please see; Medicare Overview).

Second, these costs will be based on an average healthy 65-year-old retired couple that earns less than $170,000.00 per year (see why income matters) and then the same couple at the expected future rate at age 75 using HealthView Services’ Retiremark Software Planning Tools.

RetireMark is designed to calculate the spiraling out-of-pocket health care costs for individuals based on their Age, Gender, Retirement Age, Health Conditions, Residency, Income & types of coverage needed using actuarial data from the largest, leading firm in the country and its own medical board.

Here is a table highlighting the least and most expensive states for our couple retiring at 65:

It is evident that a significant difference in healthcare costs between Hawaii (the cheapest) and Florida (the most expensive) exists by as much as 29%, but what may be even more astounding is the 12.4% difference between Hawaii, the cheapest state, and North Dakota, which is fifth.  Now let’s expand our projections ten years, when the couple is 75:

These statistics may seem extraordinary, even residents of Hawaii can expect their healthcare costs to double in just ten years and the difference between the least and most expensive states will rise to 33%.

Healthcare costs have become the biggest expense and hottest issue for Baby Boomers, but proper planning and advice from a financial advisor can help defray these unforeseen expenses.

For more information on where your state ranks, or for a personalized report based on your individual health conditions, income, age, and gender, please feel free to visit us at www.hvsfinancial.com. We can be or contacted by email at sales@hvsfinancial.com or by phone at (978) 539-8134.