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One of the lessons learned by so many newly retired Americans is just how expensive post-retirement healthcare coverage can cost. It’s one of the largest retirement expenses that you will face on retirement and a reason we see so many people working past the age of 65. In fact, most couples spend an average of $400,000 total on their healthcare after retirement. Needless to say that finding ways to save money in this area can be a critical part of your life after retirement.

The first thing you have to know is that you cannot do anything about the rising cost of healthcare every year so it’s best not to let it drag you down. Let’s focus on factors that you can control.

One factor that everyone must face is that the rules for Medicare are convoluted and complex. That means you will need to pay close attention to detail in order to maximize your savings.

Medicare Timelines that you Must Know

Timing can make a huge difference! Individuals will normally be eligible for Medicare upon reaching the age of 65. However, what a lot of people don’t realize is that the window to sign-up for Medicare will open three months before the month of their 65th birthday. Enrollment then ends three months after their 65th birthday.

Most people wait until they turn 65 to apply and end up pushing their deadline because of the time it takes to put through the paperwork. With that said, it’s also important to understand that while you can decline Part B of the coverage, there are penalties that ensue as a result of declining that coverage. Every year that you are eligible for Part B but do not enroll, you will incur a 10% penalty that is cumulative. Furthermore, applying for Part D late will result in a 1% monthly penalty. Both of these penalties can add up quickly.

HSA Becomes Complicated

Enrolling in Medicare Part A will make you ineligible to put money into an HAS. However, you will still be able to withdraw funds from this account tax-free.

What many people overlook is that when you start collecting Social Security benefits, you are automatically enrolled in Medicare Part A. That means you have to stop making any contributions to your HSA accounts. But if you want to keep working after 65, you can decline all Medicare coverage.

Income-Based Surcharges

At the time of this post, there are income-based rules that will increase the premiums for Medicare Parts B and D if your adjusted gross income goes over a specific amount. Furthermore, you will have a two-year look-back period that will be used to decide whether or not you have to apply income-based surcharges. That means wages you earned two years ago will determine your current income-based surcharges.


The rules surrounding Medicare are really complicated and the only way you can save money is to learn all of the language. Study your plan carefully and plan accordingly. You need to have a high attention to detail, otherwise you will end up adding to its already high cost.