Many people work for 35 or 40 years and would like to retire. Health care cost is the main reason they may not be able to do so.

Several studies have estimated that a 65-year-old couple will spend $260,000 on health care over the remainder of their lives. This includes premium costs and out-of-pocket expenses. It does not include long-term care expenditures.

If either spouse or both are under age 65, health care premiums could be over $600 a month each if they do not qualify for a subsidy. That can be a real budget buster.

Once they reach 65, they can qualify for Medicare. They will have to pay $135.50 per month for the Part B premium. In addition, a supplement can cost anywhere from nothing to $200 per month. Your total health cost might be reduced by carefully reviewing all Medicare options. Some people are only shown one type of coverage. Review all options and consider your health history.

Not signing up for Medicare and Part D when required could result in a lifetime penalty. Everyone turning 65 must sign up for Medicare unless they or their spouse is still working for a company with 20 or more employees that offer creditable coverage. You do not need to sign up under this case until the worker retires.

If you plan to work when you turn 65, you may enroll in the three months before you reach that age, the month of your birthday or in the three months afterward. You want to make sure there is no gap in your coverage. If you do not sign up on time, there is a lifetime penalty of 1% for every month you delayed enrollment.

For basic Medicare, this would be based currently on $135.50 per month. When the government raises the premium, your penalty will be figured from the new higher base. This penalty would last the rest of your life.

What some people do not understand, if you do not have Part D coverage – which covers prescription cost – you also will be penalized 1% a month for this. People who have an Advantage plan usually do have drug coverage and will not be penalized.

For insurance to work, you must have many people paying premiums to benefit the few who have losses. This is the reason for the Part D penalty. If you are fortunate enough to not need expensive drugs, insurance cannot allow you to wait until you need the coverage and buy it then. These penalties can be substantial over time.

Remember, your Medicare Part B and D premiums can be higher as your income increases. Sometimes, people are surprised when they pull a large sum of money out of a retirement account. You may know you will increase your income taxes, but not realize how it could affect your health care cost.

Speaking of expensive medicines, the Food and Drug Administration just approved the most expensive drug in the country. Novartis Zolgensma, a one-time treatment for spinal muscular atrophy, will cost $2.1 million. It is no wonder the medical expenses are spiraling out of control.

Gary Boatman is a Monessen-based certified financial planner and the author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”

To submit columns on financial planning or investing, email Rick Shrum at rshrum@observer-reporter.com.

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