Aging & Senior Care

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Key Takeaways

  • Assisted living costs are increasing steadily, with average annual costs ranging from $94,900 to $108,405 for a private room in 2023.
  • Long-term care insurance purchased early and health savings accounts can help cover assisted living costs. Medicaid may cover part of the costs but eligibility varies.
  • Enroll in Medicare as soon as eligible, even with other coverage like retiree insurance, to avoid penalties. Use Medigap plans to fill Medicare coverage gaps.
  • You can change Medicare supplement plans anytime but the ability to switch without underwriting varies. Consult a financial representative.
  • Medigap helps pay Medicare deductibles, copays, and coinsurance. Medicare Advantage plans are an alternative with more benefits but can change yearly.

As your thoughts turn to retirement and you start to figure out how much you'll need to pay for health care, one question, in particular, may pop into your mind: Medicare versus Medicaid — what's the difference? Understanding them in the context of retirement planning is crucial. You’ll also need to start to figure out how much you might have to pay for assisted living. Taking steps to plan for the future (and assisted living costs) could help ensure they are protected.

While no one can predict future long-term care needs, there are still steps you could take to help prepare for an uncertain tomorrow. From budgeting for these costs as part of your retirement savings to purchasing long-term care insurance, there are many strategies your family can consider to help ensure you get the care you need and deserve.

How Much Are Assisted Living Costs?

Assisted living provides help with daily activities for seniors who don't require full-time nursing home care. Costs for assisted living in 2023 range from $94,900 to $108,405 annually for a private room, and costs are rising steadily.1 Data shows out-of-pocket nursing home expenditures will increase by 17.7% between 2022 and 2031. To pay these increasing costs, families have several options to consider.

Long-term care insurance purchased early can help cover assisted living facility costs. Health savings accounts allow tax-free withdrawals for medical expenses, provided you have a high-deductible health plan. Medicaid may cover part of assisted living costs, but requirements vary by state. Planning early with options like long-term care insurance can help families best prepare for potential assisted living costs in the future. The goal is to ensure that loved ones get the best care possible as they age.

Medicare vs Medicaid: What is the Difference?

Two government programs could affect how you plan for retirement: Medicaid and Medicare. Understanding the two coverages is an important part of retirement planning. 


Medicaid is a federal-state program that provides health coverage to low-income individuals and families. It covers services not typically covered by Medicare, like long-term care, which makes it an important source of assistance for the elderly and disabled. Medicaid eligibility and covered services vary by state.


Medicare is a federal health insurance program for those 65 and older. Medicare Part A covers hospital services, Part B covers outpatient care and preventive services, and Part D covers prescription drugs. Medicare Advantage plans, also known as Part C, are private plans that provide Medicare benefits. To plan for retirement, it's important to estimate medical costs not covered by Medicare and factor them into your overall income needs and savings goals.

Consulting a financial professional can help create a realistic picture of your retirement finances.

How Does Medicare Coverage Work with Retiree Insurance?

When you retire and go on Medicare, your health insurance situation can get complicated, with multiple policies in play. To avoid penalties and hassles, sign up for Medicare as soon as you are eligible, even if you have other coverage like retiree insurance. Make sure your doctors know to bill Medicare first. You can use Medigap insurance to cover Medicare costs and gaps.

If your retiree coverage disappears, you may be able to get COBRA coverage or enroll in Medigap outside normal windows. Overall, understand how Medicare coordinates with other policies, sign up on time, and consider supplemental insurance to make billing and coverage smooth.

Managing health insurance and billing in retirement takes forethought and understanding how different policies fit together. Enroll in Medicare on time to avoid late fees. Make sure doctors know to bill Medicare first if you have supplemental retiree or VA coverage. Medicare may make conditional payments if billing is slow. Use Medigap insurance to cover Medicare gaps, and explore COBRA if retiree coverage disappears. With some planning, you can optimize coverage and avoid hassles.

Supplemental Insurance

Supplemental insurance provides extra coverage beyond your primary health plan to help pay for out-of-pocket costs like deductibles and copays as well as additional services that may not be fully covered such as dental, vision, and prescription drugs. It helps fill in the gaps in your existing coverage.

When can I change my Medicare supplement insurance plan?

You can apply to change your Medicare supplement insurance plan at any time, but your ability to switch plans and the rules vary depending on your situation. If you already have coverage, you may face limited pre-existing condition exclusion periods or underwriting when upgrading plans. However, in some cases like if your insurer discontinues your plan, you are guaranteed the ability to switch without medical underwriting or waiting periods.

It's best to consult with a financial representative to understand your specific rights and options when wanting to change Medicare supplement plans, as the rules differ by state.

Do I need supplemental insurance if I have Medicare?

Medicare does not cover all health care costs, leaving you responsible for deductibles, copays, and coinsurance. Medicare supplemental insurance (Medigap) offered by private insurers can help fill these coverage gaps by paying for some of the out-of-pocket costs of Medicare. Medigap plans are labeled with letters that denote different levels of coverage and associated premium costs. You have a 6-month open enrollment period when you first enroll in Medicare Part B where you are guaranteed coverage for any Medigap plan regardless of pre-existing conditions.

After this, insurers may deny you coverage or charge more based on health screening. Medigap only covers medical costs, so you may need additional insurance for prescriptions, dental, vision, etc. Medicare Advantage plans offered by private insurers are an alternative to Medigap that may offer more benefits but can also change yearly during open enrollment.


Properly understanding and planning for health care costs in retirement is crucial. Consulting with financial professionals, enrolling in Medicare and supplemental insurance plans at the optimal times, and regularly reviewing coverage during open enrollment periods can help retirees optimize their benefits and savings. With preparation, retirees can help gain a peace of mind knowing their healthcare needs will be taken care of.

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  1. Nursing Home Costs in 2023.

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