Nov 30, 2016 By Gary Boatman for The 4 min read

This is the time of year when most people are making health care decisions for next year. People who are covered by Medicare have until Dec. 7 to make their annual choice.

Seniors will not be seeing as large of an increase as younger workers. Many Advantage plans only went up a few dollars per month. We are still waiting to see if there will be any changes made by Medicare. People who have only been paying $104 per month for their Part B will not see an increase in their Social Security checks. This is because their premium did not go up last year since Social Security did not have an increase.

Seniors who have not yet started collecting Social Security or who turned 65 this year have been paying higher premiums all year. This difference will continue to exist until Social Security cost of living increases equalize all people’s Part B premium.

People making choices at work under employer plans are experiencing higher deductible and co-pays. There is more limited choice being offered. Some companies are only offering high deductible plans. This is the open enrollment period for the Affordable Health Care Act, or Obamacare. Many insurance companies have left the marketplace because of huge losses. To many places, there is only one company willing to write policies. No one knows what will happen if no company is willing to write policies in some areas of the country.

When choosing an ACA policy, it is very important to consider more than the plan with the lowest monthly premium. Bronze plans will always cost less, but your co-pay is 40 percent until you reach the out of pocket maximum. If you do not have enough ready cash available, it might be better to pay a little more premium each month and smaller co-pay. Otherwise, your insurance might be unaffordable to use.

For people under 65, who do not qualify for ACA, premiums have taken a huge increase. The largest insurance company in Western Pa eliminated commission to their agents on these products. Monthly premiums have taken a large jump in cost. This is preventing many people from considering retirement before they qualify for Medicare. This is especially rough for couples who are four or five years apart in age. They often planned to retire at a similar time. Health care premiums can wreck those plans.

For 2017, the minimum deductible is $1,300 for individuals and $2,600 for families. The maximum out of pocket is $6,550 for individuals and $13,100 for families. If you have a high deductible plan and are under age 65, you may be able to open a HAS plan. This allows you to create a source to pay unreimbursed medical expenses with pre-tax dollars. If you do not utilize all of this money for health care expenses, it could help supplement your retirement. Even if you have out-of-pocket expenses, you may want to use other money to pay the cost if your budget will allow. That would allow these funds to keep growing tax deferred. You are not allowed to contribute to this account after you reach age 65. If you already have an account at that age, you can continue to use it.

The 2017 contribution limit for HAS is $3,400 for individuals and $6,750 for families. Participants 55 and older can make an additional $1,000 make up contribution per year. Unlike an FSA, HAS do not have to be spent each year or you lose the benefit.

Health care costs are a very important expense to consider when planning for retirement. Fidelity estimates that a 65-year-old couple retiring in 2017 will spend on average $260,000 to cover health care cost throughout their lifetimes. This is out of pocket cost and premium expenses for health insurance. They also say an additional $130,000 will be necessary to cover possible long term care expenses. Make sure that your retirement plan considers these costs.

Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.”