How to control health care spending after you retire

Concerned about affordable health care after you retire? Create a health care spending plan to put your worries at ease.

It may seem odd at first to come up with a budget for something as important—and unpredictable—as your health.

But health care costs can cause stress for you and your family, especially after retirement. It is estimated that the average couple will need $285,000 for health care expenses after retirement, according to Fidelity.

So, coming up with a plan to manage health care spending makes good sense—no pun intended.

It doesn't have to be complicated, either. It really just takes a few easy steps to create a plan.

Step 1: Add up your routine health costs

Do you have regular, monthly prescriptions? Do you expect to visit your primary care doctor several times this next year?

Chances are you can count on a number of regular medical bills every year. If you've had a Regence Medicare plan for at least a year, you can check your explanation of benefits (EOB) statements for the past 12 months to see what you spent on doctor visits and procedures last year.

Review your prescription (Rx) EOBs to get the amount you spent on prescriptions last year, so you can get an idea of what next year will look like.

Step 2: Set aside money for new and unexpected costs

What are your health-related plans this year? Budgeting for anticipated health costs—like medication to help control high blood pressure or surgery to repair that old knee injury, for example—can help you prepare now.

You also should set aside some "just in case" money to help cover health costs you don't expect. It's hard to predict now if your summer vacation will include a side trip to urgent care or if a stumble in the garage will result in a broken arm. Take a look at your overall budget and put some money aside for those health care costs you never expect.

Step 3: Take advantage of money-saving tools

At this point, you should have a good estimate of how much you're likely to spend in the coming year. Now it's time to start looking for opportunities to save money.

Be sure to review the benefits that come with your plan, including your vision and dental coverage.

Also, take a look at your pharmacy benefits if you have them. You may be able to get a discount on some regular prescriptions when you get a three-month supply through an in-network retail or mail-order pharmacy.

Regence Medicare Advantage members have access to Research medications, a cost transparency tool, at no additional cost. With our "Average monthly cost" feature, you can compare what your costs will be if you purchase a brand-name vs. generic drug, if you purchased it through mail order vs. retail, and even if you have met your deductible or not.

You can also compare treatment options to see if there are other, lower-cost but equally effective medications for you.

Regence health plan members can always contact Customer Service with questions about coverage.

Step 4: Get to know your health plan

One of the best ways to control your health care spending is to get to know and understand how your health plan works.

If you have a Medicare Advantage plan, there are four parts of your health plan to pay attention to: network, copay and coinsurance, out-of-pocket maximum, and deductible.

Your network. This consists of the doctors, pharmacies, clinics and hospitals we've worked with on your behalf to negotiate discounts on services.
Your copay and coinsurance. This is the amount you must pay for doctor visits and medical procedures. All plans have both copay and coinsurance. Check your plan for which services have copays and which have coinsurance. As long as you use an in-network doctor, there's no copay or coinsurance for office visits covered by your Medicare-covered preventive health benefits.
Your out-of-pocket maximum for in-network and out-of-network care. Your out-of-pocket maximum is the most you have to pay for Medicare Part A- and Part B-covered medical services for that year. HMO (health maintenance organization) Medicare Advantage plans have an out-of-pocket maximum only for in-network care. PPO (preferred provider organization) Medicare Advantage plans have an out-of-pocket maximum for both in-network and out-of-network care.
Your prescription deductible (if one applies). This is the amount of money you must pay for drugs before your plan begins to pay its share.

Step 5: Keep in mind the "donut hole"

There is one more thing to remember when managing your out-of-pocket health care expenses: the Medicare prescription drug coverage gap, also known as the "donut hole."

After you pay your annual prescription deductible (if your plan has one), you pay a copay or a coinsurance for each prescription you fill. Your plan pays the rest. This is called the initial coverage stage.

However, once you and your plan together have spent $4,660 for prescriptions in 2023, you leave the initial coverage stage and enter a coverage gap, or "donut hole." When you're in the coverage gap stage, you pay coinsurance of 25% for your generic and brand-name medications.

Note: People with Medicare who get "Extra Help" paying Part D costs won’t enter the coverage gap. "Extra Help" is a Medicare program to help people with limited income pay Medicare Part D drug coverage premiums, deductibles, coinsurance, and other costs.)