3 Savvy Medicare Moves That Could Slash Your Healthcare Costs in Retirement

There are certain expenses you might encounter in retirement that are optional, like paying for cable, and those that are non-negotiable, like paying for food. Healthcare falls into the latter category. And unfortunately, it can be more expensive than a lot of retirees bargain for.

Last year, Fidelity projected that the typical 65-year-old would be looking at a whopping $157,500 to cover their healthcare expenses throughout retirement. Reading between the lines, this tells us that people with pre-existing health issues might spend even more on their care. Given that the median retirement savings account balance among Americans aged 65 to 74 is only $200,000, per the Federal Reserve, that paints a pretty scary picture.

The good news, though, is that there are steps you can take to lower your healthcare spending as a retiree. But it all boils down to making smart Medicare moves like these.

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1. Avoid a Part B surcharge

Your initial Medicare enrollment window lasts seven months, beginning three months before the month of your 65th birthday and ending three months after that month. If you're covered by a qualified group health plan at the time of your initial enrollment period, you don't have to worry about being penalized for signing up for Medicare after this time period expires. But if that's not the case and you don't have qualifying group health coverage, you'll risk a costly penalty for life for a late enrollment.

Specifically, you'll be assessed a 10% surcharge on your Medicare Part B premium for each yearlong period when you were eligible to enroll but didn't. This surcharge won't apply to Part A, since enrollees generally don't pay a premium for that hospital coverage. However, a separate surcharge may apply to your Part D drug plan if you're late with your enrollment.

To avoid these extra costs, sign up on time unless you have group health coverage that entitles you to a special enrollment period later on. It's that simple.

2. Sign up for supplemental insurance as soon as you can

Medicare enrollees can choose between original Medicare and Medicare Advantage . If you select an Advantage plan, it will generally cover all of your health-related needs so that you don't have to shop around for a separate drug plan.

If you decide to stick with original Medicare -- which you may want to do since it generally gives you access to a much broader provider network -- be sure to sign up for supplemental insurance known as Medigap as soon as you're able to. Your initial Medigap signup window starts the first month you're enrolled in Part B and are 65 or older. That period lasts six months, so it's a bit shorter than your initial Medicare enrollment window.

Medigap won't pay for services that Medicare itself won't cover, like dental care. But it can pick up the tab for expenses like hospital deductibles and coinsurance, so it's important to explore your options during your initial enrollment window. Waiting longer puts you at risk of being denied coverage. And if you are approved, you might get stuck paying more.

3. Take advantage of Medicare's free preventive services

There are many services you might receive as a Medicare enrollee that you'll have to pay for to some degree, whether in the form of a deductible, coinsurance, or copay. But certain Medicare services are available to enrollees free of charge. It's important to take advantage of those preventive options to protect your health and potentially avoid costlier medical bills down the line.

Medicare enrollees, for example, generally get a free wellness visit each year. Scheduling yours could help a provider identify and treat a health issue before it escalates into a more serious and expensive problem.

Paying a fair amount for healthcare may be unavoidable once you retire. But these Medicare moves could make an otherwise giant expense a lot more manageable.

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