You’re in Health Care — But Have You Thought About Yours in Retirement?

This article was co-authored by Jordan Lochner Mills, CFP®, Senior Financial Advisor at Wipfli Hewins Investment Advisors, LLC, and Nicholas Smith, Director of the Health Care Consulting practice at our affiliate, Wipfli LLP. With more than 1,900 associates, 49 offices across the United States and two offices in India, Wipfli ranks among the top accounting and business consulting firms in the nation.

You’ve dedicated your career to improving the health of others, but how often do you consider your own health care needs and what they’ll look like after you retire?

According to one recent estimate, the average cost of health care for a 65-year-old couple who retired in 2017 — not including assisted living or nursing home costs — will be $275,000, a full 6% increase over 2016.1 Medicare premiums, copays and deductibles, as well as out-of-pocket prescription expenses, all add up to this big $275,000 number. And if the retiring married couple made over $214,000 jointly in 2015, they’ll be paying twice as much in Medicare Part B premiums as a married couple who made under $170,000.2

You know better than anyone how health care costs are continuing to rise. Regardless if you’re a physician with an independent practice or part of a larger health care organization, here’s what you need to consider so you can better plan for your retirement now.

Are Market Distractions Throwing You Off Course

If You Retire Before You’re 65

You qualify for Medicare when you turn 65, so if you retire before then, you have two main options for health insurance: coverage under the Consolidated Omnibus Reconciliation Act (COBRA) and individual health insurance.

COBRA is a good option for those who have group health insurance at the time they retire, but also have health problems that would make obtaining independent insurance too expensive. You can have COBRA for 18 months after retiring from your job, and it covers your spouse and any dependents.

If COBRA isn’t an option for you, consider individual health insurance, but do plenty of research on your options. This insurance can be even more expensive than COBRA, and you’ll need it until the time you become eligible for Medicare. Doing your due diligence on researching different plans can help find the best one for you. Shop online on your state’s health insurance exchange or contact a trusted health insurance agent for help.

If You Retire at or After 65

When you turn 65, you can go on Medicare, but there are coverage choices you’ll have to make and gaps you may face. Medicare has four main parts to it, plus Medigap coverage.

Medicare Part A covers hospitalization at no charge to those eligible for Social Security benefits (whether by themselves or through their spouse).

Medicare Part B covers doctor’s services for a monthly premium.

Medicare Part C, or Medicare Advantage, is a private plan run through Medicare that provides an alternative to Parts A and B. Individuals pay for their own coverage.

Medicare Part D is a prescription drug plan, and anyone enrolled in Parts A or B is eligible. Costs include premiums, yearly deductibles, copayments, coverage gaps and extra help, and will vary based on the drugs you use, your plan and whether you go to a pharmacy within your network.3

Medigap Coverage is for those Medicare beneficiaries who want to cover what’s not included in other Medicare parts, such as a partial coverage of emergency care charges accrued in a foreign country, preventative care and at-home assistance with daily living. It’s available from many carriers at an additional cost.

Don’t underestimate how much Medicare will cost you based on your income and what it covers. Refer to the chart on the website for more information.

What You Can Do Right Now

According to a report issued by Healthview Services, the inflation rate for health care could rise 5.47% annually for the next decade, with the cost of supplemental insurance rising 7.12%.4 It just goes to show how important it is to be educated and have a plan when it comes to retirement. Here are three ways you can prepare to meet health care costs after you retire:

Start Saving in a Health Savings Account (HSA): If you’re enrolled in a high deductible health plan, you can make tax-deductible contributions to an HSA, which makes it a great savings vehicle for retirement. In 2018, the contribution limit is $3,450 for single medical plans and $6,850 for family plans. If you’re 55 or older, you can also make an additional catch-up contribution of $1,000.

Purchase Long-Term Care Insurance: In 2017, the medium cost of assisted living was $45,000 per year, while a nursing home cost $85,776 a year for a semi-private room and $97,452 for a private room, according to another study.5 Purchasing long-term care insurance in your mid-50s (when it’s cheaper) can go a long way — the National Academy of Sciences estimates that 56% of those currently 57–61 years old will find themselves in a nursing home for at least one night in their lifetime.6

Plan Ahead: If you’re an independent physician, plan ahead if you’re going to sell your practice — and be realistic about how much you’ll get for it versus what you think you could or should get. With declining reimbursement and rising health care costs, independent physicians should also consider joining a larger organization such as a hospital to cut overhead costs (e.g., providing health insurance for your practice’s employees and renting or owning office space).

Whatever you decide, research your options long before you retire so you can properly plan ahead. And don’t be afraid to ask for help. From succession planning to wealth management to health care, our team can help you successfully plan for your retirement. Contact us today!


Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
Nicholas Smith

Director | Wipfli LLP

With over a decade of proven leadership experience with Wipfli LLP’s national Health Care Consulting practice, Nicholas leads consulting engagements with a broad array of health care organizations, including health systems, county and district hospitals, critical access hospitals, physician specialty groups and more.

No Comments Yet

Comments are closed

You’re in Health Care — But Have You Thought About Yours in Retirement?

time to read: 4 min