Broker Check

4 Ideas for Managing Health Care Cost in Retirement

| September 09, 2022

September Client Letter: 4 Ideas for Managing Health Care Costs in Retirement


Managing and wrapping your head around health care costs and health insurance may seem like a daunting task.

A financial wellness study by  PricewaterhouseCoopers found that over one-third of baby boomers—38% to be exact—said that the cost of health care is their top fear. It’s even higher than anxieties generated by the fear of running out of money.

But there are ways to manage costs and reduce surprises as you travel the road into retirement. Let’s look at several ideas.

  1. Do you have a health savings account? You may qualify for an HSA if you have a high deductible health plan (HDHP). For 2022, the minimum deductible for an HDHP is $1,400 for an individual and $2,800 for a family.

In most states, a tax deduction is allowed for an HSA, earnings are not taxed within the account, and withdrawals can be made tax-free for qualified medical expenses.

 Take full advantage of your HSA. You may even consider putting it roughly on par with a traditional IRA.

 An HSA not only allows for tax-free withdrawals for qualified medical expenses, but once you turn 65, you may take a penalty-free withdrawal for any purpose, though you will pay ordinary income tax if not for a qualified medical expense. Penalty-free withdrawals for IRAs begin at 59½.

 While you can pay Medicare premiums with your HSA funds, once enrolled in Medicare, you lose the option to contribute to your HSA.

  1. Get the right Medicare plan for your needs. Do you want to enroll in traditional Medicare (Parts A—hospital insurance, B—medical insurance and D—prescription drug coverage). Or would Medicare Advantage (Part C that is offered by private companies) be your best choice?

Medicare C plans are offered by private companies approved by Medicare and must follow rules set by Medicare. It’s an option for you to receive your Parts A and B coverage.

You may be drawn to the advantages of Part C, including benefits for hearing, dental and vision, fitness programs, and the possibility of lower monthly premiums (can vary from $0 to $200+).

The maximum in-network, out-of-pocket, is $7,550 in 2022.

Be aware that if you have a Medicare Advantage plan that includes prescription drug coverage, you will have a separate out-of-pocket maximum for prescription drug costs. Most Medicare Advantage plans include prescription drug coverage (Part D).

As with most choices in life, you must balance the benefits with any drawbacks.

Are your doctors within your plan’s Medicare Advantage network or could the Part C plan you’ve chosen be discontinued? You may also face limits switching back to original Medicare. With Medicare, you can choose any doctor that accepts Medicare payments.

Choosing the right policy can be a daunting task, and the themes we’ve touched on are meant to provide you with a starting point. If you have questions or would like additional resources, please let us know.

  1. Be aware of the late sign-up penalty for Medicare.

Most of us are aware that Medicare becomes available at age 65. But did you know that if you miss your initial enrollment period (IEP), you will wind up paying a penalty unless you have other coverage that’s similar in value to Medicare (like from an employer)?

The IEP spans from three months before the month you turn 65 through three months after you turn 65. It includes the month you turn 65 for a total of seven months.

If you miss your seven-month IEP, you may have to wait to sign up and pay a monthly late-enrollment penalty for as long as you have Part B coverage.

Late enrollment penalties are added to your premium - they are not a one-time late fee, and the penalty rises the longer you wait to sign up.

You may also pay a penalty if you must pay a Part A premium. Most people, however, don’t pay for Part A.

You may also be subject to a permanent Part D penalty unless you have coverage that’s similar in value to Part D or you qualify for what Medicare refers to as ‘extra help.’

It sounds complex. However, if you have questions, please let us know.

  1. Consider long-term care. Long-term care can be part of your overarching financial plan. It can be a multifaceted and weighty topic that many delay talking about or planning for.

Someone turning 65 stands about a 70% chance of eventually requiring some type of long-term care, according to the Administration for Community Living.

Currently, Medicare only covers short nursing home stays or limited home health care when you require skilled nursing or rehab.

A long-term care policy can provide you with options and eliminate some costly risks, but plans aren’t cheap and the premium may rise. If you choose to purchase insurance, it will depend on what’s best for you, your family, and your ability to pay expenses out of pocket.

If you need long-term care, support usually comes from an unpaid family member or friend, a professional who comes to the home, adult day services, or long-term care facilities.

How you decide to approach health care will ultimately depend on various factors that are unique to your situation. We are here to assist and are happy to entertain any thoughts or questions you may have.

Pivoting away from a pivot

In July and into August, investors were warming to the possibility of a dovish reversal in Fed rate hikes early next year—a pivot, according to a closely watched gauge that measures rate expectations from the CME Group.

Remarks from Fed Chief Jerome Powell’s press conference in late July fueled such hopes, though he was careful to dismiss any chatter about next year.

“You’ve got to take any estimates of what rates will be next year with a grain of salt, because there’s so much uncertainty,” he said.

Fair enough, but that didn’t prevent a surge in optimism that a peak in the rate of inflation might soon be followed by a peak in hawkish Fed sentiment.

The growing belief that the rate of inflation has peaked, coupled with talk that interest rates might head lower next year, sparked a rally that carried over into August.

Yet, several Fed officials and Powell himself doused hopes that the Fed might be set to reverse course next year, reigniting market volatility.

Table 1: Key Index Returns




Dow Jones Industrial Average



NASDAQ Composite



S&P 500 Index



Russell 2000 Index



MSCI World ex-USA*



MSCI Emerging Markets*



Bloomberg US Agg TR Value Unhedged USD



Source: Wall Street Journal,, Yahoo Finance, Bloomberg

MTD returns: July 29, 2022-August 31, 2022

YTD returns: December 31, 2021-August 31, 2022

*In US dollars

In a short August 26 speech that lasted about nine minutes, Powell was direct, calling the Fed’s goal of price stability its “overarching focus right now.”

“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance,” he said.

“While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

That was Powell pivoting away and distancing the Fed from investor talk of a pivot.

Use of the word ‘pain’

It’s unusual for a Fed chief to use the word ‘pain.’ Still, it was carefully selected in a prepared speech. It wasn’t an off-the-cuff remark.

In recent years, rate hikes were communicated in gentle terms.

But it’s a different economic environment today. And the Fed seems intent on squashing the very inflation it helped create.

Yet, it would be unfair to blame high inflation completely on the Fed. Trillions of dollars in fiscal stimulus, pandemic lockdowns, and supply chain woes have also contributed to price pressures.

But the Fed is being tasked with cleaning up the mess.

You see, the Fed wants to avoid the mistakes of the 1970s, when monetary policy was inconsistent, and inflation became embedded in the fabric of our economy.

In its view, it’s better to take a tough stance now rather than be forced into even harsher measures down the road.

While there was no mention of a recession in Powell’s speech, past talk of a soft or softish economic landing was noticeably absent.

A soft landing is jargon for a slowdown in economic growth that preempts a rise in inflation (or slows the rate of inflation) without a recession. We saw this take place in a series of rate hikes in 1983-84 and 1994.

In both cases, economic growth moderated, rate hikes ceased, and stocks posted strong returns in 1985 and 1995.

Today, the Fed is preparing the public for a bumpier ride, and stocks reacted accordingly by month’s end.

It is operating in an environment where a peak in inflation isn’t enough to change course. Today, the Fed has repeatedly said it wants “compelling evidence that inflation is moving down, consistent with inflation returning to 2%.”

A simple slowdown in inflation would be an easier objective. But central bankers seem intent on getting inflation back to 2%. Moreover, they also want to recover lost credibility after botching last year’s forecast that the surge in inflation was simply transitory.

Two percent is an obtainable goal, but it’s a steeper hurdle that will require more of the harsh medicine that has become a big part of the Fed’s anti-inflation playbook. The Fed also runs the risk it could spark undue hardship in financial markets, as products created when rates were lower collide with today’s higher-rate environment.

A little bit of luck from the supply chain and a continued moderation in oil prices would also help.

Final thoughts

How might an investor react amid today’s uncertainty?

Look past the headlines. Stocks respond to short-term headlines but you should stay focused on your long-term goals.

We caution against timing markets. In order to be a successful market timer, you must consistently pick the top and the bottom through various cycles.  We have yet to find anyone that has mastered such a feat.

Maintain your diversified portfolio that is based on your risk tolerance. What level of short-term loss is acceptable as you invest toward your long-term financial goals? Are you finding that the recent market decline is forcing you to rethink your tolerance for risk? If so, let’s talk.

Finally, a holistic financial plan keeps you focused on your long-term goals and helps remove the emotional component that encourages too much risk when stocks are surging and discourages one from panic-selling when markets decline.

Your financial plan isn’t set in stone. Any number of circumstances and changes in your personal situation may require a mid-course correction.

But a disciplined approach has proven to be the most effective path to reaching one’s goals.

I trust you’ve found this review to be educational and insightful. If you have any questions or would like to discuss any matters, please feel free to give me or any of my team members a call.

As always, thank you for the trust, confidence, and the opportunity to serve as your financial advisor.

Kind Regards,


Niles P. Geary, II, MBA, CRPC, AIF™ 

Co-Founder & CEO 

Niles P. Geary, II is Registered Representative offering Securities and Advisory Services through UNITED PLANNERS FINANCIAL SERVICES, A Limited Partnership Member: FINRA, SIPC Voyage Partners Financial Strategies, LLC and United Planners are not affiliated. 

This page contains links to third-party company websites. By selecting a link, you will be leaving our website and launching a new browser window. These links are provided for informational purposes only and should not be viewed as an endorsement, sponsorship, solicitation or other affiliation with respect to any third parties. We are not making any recommendations or providing any advice on securities in particular or investments in general. Neither Voyage Partners Financial Strategies, LLC nor United Planners Financial Services have reviewed the content of, and are not responsible for, the information of the results of third-party websites. 

Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Indexes discussed are unmanaged and cannot be invested into directly. Keep in mind that current and historical facts may not be indicative of future results.