Cost of Medicare vs Medicare Advantage

I assume many people around retirement ages will be interested to learn more about the Medicare system. Here is good info on the high level cost for Medicare vs Medicare Advantage.

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So you're 65 – what's this Medicare thing?

Once you reach the glorious age of 65, you become eligible for Medicare.

This is the health care program you've paid for all your life through taxes. Now you get to collect the benefits. People that reach age 65 and become eligible for Medicare can expect to live for 21 more years.

Interestingly, Medicare will cover about 65% of your expected health care spending during those 21 years. The other 35% is on you.

How much will that be?

You better know – because it's a lot. It needs to be part of your retirement planning. If not, your plans may need to be revised when it's too late.

On average, people on Medicare for those 21 expected years will spend about $200,000 of their own money on health care.

An alternative is to consider the Medicare Advantage ("MA") program. This is a very successful partnership between the government and private-sector health care companies. This is a way to get all your Medicare benefits plus others not included in Medicare for much less.

Don't take my word for it. About 40% of the Medicare population gets their benefits this way today. And that level has been rising for the last 10 years.

On average, using an MA plan will cost $130,000 out of your pocket during those 21 years.  

Thomas Carroll