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3 Big Medical Costs and How to Protect Against Them

Author: Andrew Williams

Whether you are just starting out or nearing retirement, a medical event can cause financial strain. In this age of consumer-directed healthcare, people are required to foot a larger portion of their medical costs, which means more out-of-pocket expenses. It's partly the reason medical bankruptcies are common these days, even among people with health insurance, and those expenses are only going to increase as you age. According to Fidelity Investments, the average couple will spend $245,000 on medical expenses in retirement. And that doesn't take into account any long-term care needs, which can costs thousands upon thousands of dollars each year.

While it is impossible to prevent a sudden illness or injury, there are some big medical costs people will face in their lifetime that can be prevented or planned for. From long term care to chronic illnesses, here's a look at big medical costs and how to protect against them. (See also: 20 Ways To Save On Medical Bills.)

Long-Term Care

When it comes to medical expenses, one of the costliest of them all is long-term care. According to long-term care insurance provider Genworth, in 2015 the annual cost of adult day care was $17,904, while an assisted living facility cost $43,200 a year and a nursing home cost anywhere from $80,300 to $91,250 a year. If you need around-the-clock care for more than a year, and it can easily deplete your retirement savings and then some. But needing long-term care doesn't have to be a foregone conclusion. (See also: Long-Term Care Insurance: Who Needs It.) The cheapest and the best way to prevent a need for long-term care is to stay healthy. That means maintaining a normal weight, avoiding smoking and excessive drinking, exercising daily and keeping the mind fresh. If that isn't a reality, there is also long-term care insurance that can cover the cost if you fall ill for an extended period. Since long-term care insurance can get costly, the earlier you take it out, the better off you will be. Wait until your health suffers and you will be paying a lot for coverage if you can get it at all. Once you're in your mid-50s, you should consider taking out a long-term care insurance policy if medical costs when you are older are going to be a concern. (See also: Managing Healthcare Costs In Retirement.)

Chronic Illnesses

Chronic diseases and conditions plague about 117 million people as of 2012 according to the Centers For Disease Control, with one of four adults having two or more chronic health conditions. Diseases and conditions like heart disease, stroke, cancer, diabetes, obesity and arthritis not only tax the nation's health care system but create a lot of out-of-pocket costs for consumers for medicine, doctors' visits and specialists. The CDC found in 2010 that the total costs of heart disease and stroke was around $315.4 billion with $193.4 billion going to direct medical costs. Cancer care cost $157 billion in 2010.

Although you can't prevent cancer, there are ways to reduce the costs associated with a chronic disease. Just like with long-term care, the easiest and cheapest way to curb medical costs is to live a healthy lifestyle. But if you're ill and must purchase drugs, buying discount medicine or going with a generic version of your prescription can go a long way in saving money. (See also: Get Sale Prices On Healthcare With Discount Plans.) Purchasing a health insurance plan that may have higher premiums but provides more coverage can also reduce the out-of-pocket costs associated with a chronic disease.

Prescription Drugs

With the high number of people suffering from chronic illnesses, prescription medicine has become a fact of life for millions of Americans. So is rising prescription drug costs. According to a Consumer Reports survey from this summer, respondents paid an average of $39 more a year for prescription drugs than a year ago, and one in ten said they paid $100 more than the previous year. Medication is a big expense whether you are young or old, which means consumers have to figure out ways to lower the cost. Thankfully there are a lot of options with generic drugs being one of the biggest cost savers. By many estimates about three-quarters of medications are available in a generic form. If your doctor prescribes a brand name one, ask for a generic version to save dollars. Even shopping around can save you money, since the price a drug sells for can vary from one pharmacy to the next. (See also: 6 Ways Retirees Can Save On Prescription Drugs.)

The Bottom Line

Healthcare is one of those costs that is only going to rise as you get older. While no one can prevent a sudden illness or injury completely, there are ways to prepare for big medical costs during your lifetime. Staying healthy, taking out long-term care insurance and getting discounts on prescription medication are all ways to reduce the costs associated with your health.

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