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Solo and small-firm lawyers thinking about retirement need to factor in the cost of health insurance coverage, which currently averages $600 a month per couple.

That’s according to Matt Tassey, a broker at the Burwell & Burwell insurance agency in Portland, Maine.

“We tell people that a married couple can plan on spending $500 to $600 a month for their health care expenses,” said Tassey, a past chairman of the LIFE Foundation, an Arlington, Va.-based insurance industry communications group. “And it’s only going to go up.”

“Medicare is pretty comprehensive,” said Cheryl Matheis, senior vice president for heath strategy at AARP. “But there are gaps in Medicare’s coverage, kind of like the gaps in a regular insurance plan. Over the years they have actually become bigger.”

For example, there’s a $1,100 deductible for Medicare Part A (hospital care). There’s also a $155 annual deductible for Medicare Part B (doctor and outpatient services), as well as a 20 percent co-pay.

Most Medicare beneficiaries end up paying about a third of their expenses out of pocket, according to Matheis. That’s one of the reasons most Medicare beneficiaries buy Medicare prescription drug coverage (Part D). There are dozens of Medicare prescription drug plans that are offered by private insurance plans, but administered by the federal government.

Most people also buy supplemental, or Medigap, insurance, through a private insurance carrier, Matheis said.

Filling the gap

There are more than a dozen Medigap plans on the market. Each has unique benefits, but the basic plans cover deductibles and co-insurance for hospital and doctor’s charges under Medicare Parts A and B.

Premiums vary according to the range of services the plans cover, as well as an individual’s age, health history and geographic location.

“Most people should have a supplemental plan,” Tassey said. “One of the difficulties is that if you don’t have a supplemental plan and you have a significant illness, the co-insurance is a big deal.”

There’s also a Medicare Advantage program, available through private insurance companies. It’s similar to an HMO and covers doctor and hospital services, as well as preventive care. Subscribers pay a monthly premium, in addition to their Part B premiums, as well as co-pays for covered services.

Medicare Advantage is a “private way of getting your Medicare coverage through a coordinated care plan,” Matheis explained. “The comparison you’re going to make is between Medicare Advantage and traditional Medicare, plus a Medicare supplement.”

While Medicare Advantage is inexpensive now, the health care reform law passed in March slashes tax subsidies for Medicare Advantage. That means it is likely that the Advantage plans, which are run by private insurers, will either increase their premiums or reduce benefits.leaving their 10 million beneficiaries with the prospect of higher premiums or reduced benefits.

The bottom line

Ultimately, even individuals who have Medicare Parts A and B, Medicare supplemental and prescription drug coverage can expect to pay about $600 per couple per month for health care expenses.

Here’s how it breaks down:

• Part A premium, for hospital care, is paid for with payroll taxes the individual or his or her spouse paid while working. So, usually there are no Part A post-retirement premium costs.
• Part B, which covers doctors’ visits and out-patient procedures, costs $110.50 per month per person. (This is usually deducted through Social Security).
• Part D – prescription drug coverage – costs $30 to $70 a month in premiums per person. Medigap plans, which cover the deductibles and co-pays in Parts A and B, cost $150 per month per person.

Tassey advises attorneys thinking about retirement to plan ahead for health insurance expenses and work with an insurance professional.

Additional information is available on the Medicare website:

Some state bar associations endorse specific Medicare supplemental plans that are offered at a discount to members, and the ABA offers Medicare supplemental coverage for members through its American Bar Insurance plan.

Questions or comments can be directed to the writer at: nora.tooher@lawyersusaonline.com

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