One of the biggest expenses you might encounter as a retiree is healthcare. As you age, health issues may be more likely to arise. That could, at the very least, lead to an uptick in diagnostics that you're required to help pay for.
But if you're a Medicare enrollee, you'll be thrown a bone when it comes to paying for coverage under Part A, which encompasses hospital care. That's because most Medicare members aren't charged a monthly premium for Part A the way they are for Part B, which covers outpatient care.
That doesn't mean that all your hospital care under Medicare is free, though. And if you buy into that misconception, it could end up hurting your retirement finances in a really big way.
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There are other costs you might face
Despite not charging enrollees a premium, Medicare Part A has the potential to be very expensive once you end up needing hospital care. This year, for example, each time you're admitted to a hospital, you're on the hook for a $1,632 deductible that only covers your first 60 days of care.
From there, you'll pay a daily coinsurance rate of $408 for days 61 through 90 of being in the hospital. And if your stay extends beyond that point, you'll be looking at dipping into your lifetime reserve days and paying a whopping $816 per day until you get released.
You should also know that if you're moved to a skilled nursing facility following hospital treatment, Medicare Part A will pick up the cost -- up to a certain point. But once your stay in one of these facilities exceeds the 20-day mark, you'll be charged a coinsurance rate of $204 per day.
Don't get caught off guard
Clearly, hospital coverage under Medicare Part A is not free. So don't confuse a lack of having to pay for premiums with a lack of having to pay, period. Instead, do what you can to put yourself in a position to cover those costs.
One option is to sign up for Medicare supplemental insurance, or Medigap, as soon you're able to. A Medigap plan might pick up some of the costs you incur during an extended hospital stay. There are different Medigap plans you can choose from, each of which comes with its own cost and set of benefits, so you'll want to research your options carefully.
Another good thing to do is to generously fund a health savings account, or HSA, during your working years, and then reserve that money for retirement. That way, you can dip into your balance to pay for some of the aforementioned costs if needed.
While it's a nice thing that Medicare Part A enrollees usually don't pay a premium for hospital coverage, that doesn't mean there aren't other costs to consider. So if you've been told that Part A is completely free, don't buy into that misinformation. Doing so could lead to a situation where you're horrendously unprepared for some of the expenses you might inevitably face.
