Nationwide recently released its Survey on Healthcare Costs, and the most startling statistic—actually the very first statistic cited—was that of the retirees polled who were age 65 and older, 97% stated that they were enrolled in Medicare.

How many human-related activities can be measured at 97%?  Do 97% of Americans finish high school?  Have a bank account?  Get regular haircuts?

NINETY SEVEN PERCENT. 

Despite the fact that more than nine-tenths of Americans will eventually subscribe to Medicare, most financial plans never address what it actually costs. 

Ultimately it ends up being an afterthought—a line item in the expense column during the planning process.  This may be why the vast majority of Americans are under the false assumption that Medicare is actually free (or at least extremely affordable).  It is also why the financial services industry must address this variable as 78 million Boomers march to retirement.

97% of retirees deserve to know what their future holds:

Part A – No premium for those who qualify, but there are some hidden costs like deductibles and co-pays for services (For more on Part A, click here.)

Part B – a $99.90 monthly premium for those earning under the average amount plus other deductibles, co-pays, and excess charges (For more on Part B, click here.)

Part D (Drug Coverage) – Premiums (also based on income), deductibles, co-pays & other charges based on the terms & conditions of the insurance company selling the plan. (For more on Part D, click here.)

MediGap – This form of coverage takes care of the co-pays, deductibles, & excess charges of Parts A and B, but here are fairly high premiums. (For more on MediGap plans, click here)

Other Out of Pocket Expenses – Medicare does NOT cover dental, vision, hearing, podiatry, or routine exams/physicals. Medicare will only cover procedures after a beneficiary has been admitted as an inpatient to a hospital.

Medicare Advantage Plans – are administered by private insurance companies and must follow the rules & regulations of Medicare. They offer the same coverage as original Medicare (with the exception of a MediGap policy), but also provide opportunities to purchase coverage for non-Medicare services like dental, vision, hearing, podiatry, and routine physical exams.

These seemingly small monthly premiums may not seem like much, but factor in all of the additional out-of-pocket expenses—the co-pays, uncovered medications, eye exams—over the long-term, and the cost of simply staying alive can utterly consume the savings of unprepared retirees. 

A healthy 60-year-old couple earning less than $170,000 per year can expect to incur over $685,000, just in Medicare costs, through age 90.  If that same couple happens to make $1 more than the allotted $170,000, they can expect to pay over $825,000 over those same 25 years.

With projections of this magnitude likely to affect almost our entire population, one question begs to be answered:

How can industry professionals, whose sole purpose is to help people plan for retirement, ignore the greatest expense of 97% of their clients?