How Women Should Plan for Medicare Differently

Woman Consults with Pharmacist. An older African-American woman talks to a Hispanic male pharmacist as he explains her prescription.

Planning for retirement often means different things to different people. Lifestyle priorities are big things to consider when planning for retirement. Saving for retirement also means accounting for different savings habits between men and women.

For instance, women, in general, need to save more than men for retirement, but they often earn less.

Women and Healthcare Statistics

Women need to save more for retirement than men because women typically have a longer life expectancy and they have more chronic health issues that require more health care.

According to the National Institute of Health, women over 65 take an average of 3.75 prescription drugs, while men over 65 take approximately 2.4 prescription medications. Among our nation’s seniors on long-term medications, just 16 percent of men use four or more medications regularly; that amount increases to roughly 40 percent for women.

Additionally, records show that the number of women who need long-term care at the end of life is roughly double compared to men according to the Centers for Medicare and Medicaid Services.

That’s  why it’s so important that women save more efficiently for these potential medical expenses in their years of retirement.

How Medicare Works and the Cost

Many couples and individuals entering retirement and aging into Medicare don’t realize how Medicare actually works and how much it costs. All too often people will build their retirement savings without setting any money aside for medical care. This is due to the common misconception that Medicare is completely free and covers medical costs at 100 percent.

Falling for this myth can cause major financial problems later in retirement. It’s important that women understand Medicare only pays its portion of 80 percent of approved medical costs. If Medicare doesn’t approve a particular type of care, screening or treatment, the patient is responsible for covering expenses at 100 percent.

Medigap Plans

A great way to alleviate the financial burden of paying 20 percent of medical expenses every time you use your Medicare benefits is to enroll in a Medicare Supplement plan (also known as Medigap). A Medigap plan is additional insurance you can get that’s designed to help cover your out-of-pocket costs under Part A and Part B.

There are many Medigap plans to choose from. All plans are designed differently in terms of benefits and monthly premiums. You can get as much or as little protection from unexpected costs as you think you’ll want in retirement.

How to Pay and Save for Healthcare in Retirement

There are several ways that women can save for healthcare costs in retirement apart from IRAs and a 401(k). Although IRAs and a 401(K) are great for general retirement savings, it’s strongly encouraged that women open a health savings account (HSA).

An HSA is one of the best savings vehicles and methods of payment for medical expenses before and during retirement. You can use the money in an HSA to pay for qualified health expenses before you actually enter retirement. HSAs can be used for costs including dental, vision, and some over-the-counter medications in addition to deductibles. Once you hit retirement at 65, you can use the tax-free money on anything, including your Original Medicare, Medigap and Medicare Advantage premiums.

Each year prior to retirement, you can contribute pre-tax dollars ($3,500 a year for individuals, $7,000 for families as of 2019) into an investment account and the money grows tax-free. Untouched contributions in an HSA roll over and there is no max amount of money you can keep in your HSA.

Opening an HSA is one of the best acts for women to take to plan for Medicare costs. If numbers and money management isn’t your thing, it’s always a great idea to contact a financial expert to help you prepare for retirement. For questions and concerns about Medicare and healthcare options in retirement, contact a Medicare broker to better understand what’s available to you in your area.


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Danielle Kunkle Roberts is a founding partner at Boomer Benefits, a national agency specializing in Medicare-related insurance products since 2005. Serving thousands of Medigap policyholders in 48 states, Boomer Benefits helps baby boomers learn the ropes regarding Medicare. Danielle also writes frequently about Medicare, retirement, and personal finance topics for Forbes, and is a member of the Forbes Finance Council.