Center for a Secure Retirement
Financial Next Steps After a Diabetes Diagnosis

Financial Next Steps After a Diabetes Diagnosis

Being diagnosed with a chronic condition comes with physical and emotional challenges, but it also involves managing the cost of treatment. These financial considerations are all the more important when living on a fixed income in retirement.

If you or a loved one has received a diabetes diagnosis, the cost of care and supplies can be overwhelming. Here are a few ways to manage these medical expenses in both the short and long term.

The Cost of a Diabetes Diagnosis

Americans living with diabetes pay 2.3 times more for health care than those who don't have this chronic condition, according to the American Diabetes Association. They also spend an average of nearly $17,000 a year on medical expenses.

The largest medical expenses associated with treating and managing diabetes involve costs for inpatient care or an extended hospital stay, prescriptions, doctor visits and supplies such as an insulin pump, which may require co-pays and coinsurance that can increase your out-of-pocket costs. You or your loved one may also incur indirect costs, such as loss of productivity at work, having to take unpaid sick days or leave, or the inability to work on a consistent basis. These work-related factors might play less of a role in retirement, but health care costs can still stack up quickly.

All of these factors can make diabetes financially challenging, which is why it's important to understand all your options for managing the costs associated with a diabetes diagnosis.

Paying for Diabetes Care and Treatment

Does Medicare pay for insulin? When you or a loved one are diagnosed with diabetes, this is one of the first questions you might ask. Medicare, the government-sponsored health insurance program for Americans age 65 and older, doesn't pay for insulin coverage. However, this only applies to Part A, or the part of Medicare that includes hospital insurance.

Medicare Part B, which provides medical insurance for seniors, will cover 80% of the costs for an insulin pump if it's medically necessary. Part B will also cover some of the costs for diabetes equipment and supplies for at-home monitoring of your blood sugar levels, such as test strips and lancets. Otherwise, you must pay for supplies such as syringes, needles, gauze and alcohol swabs out of pocket unless you have Medicare Part D prescription drug coverage. Part D also covers insulin that isn't administered via a pump, such as injectable insulin.

What is or isn't covered on Medicare's approved list can get complicated. To navigate all this information and make sure you understand your coverage, it's best to review Medicare's diabetes coverage handbook, contact your plan benefits administrator or call 1-800-Medicare with any follow-up questions.

Aside from Medicare, you also have the option to purchase a Medigap plan for supplemental health insurance. A Medigap policy can help to lower your out-of-pocket costs for diabetes-related expenses Medicare Part A and Part B don't cover. Just keep in mind you'll have to pay a monthly premium, so you'll need to consider whether this expense is affordable compared with what you'd pay out-of-pocket every month for diabetes supplies and treatment not covered under Medicare.

If you're under 65, you may have employer-provided health insurance or be self-insured through private health insurance. If you are diagnosed with diabetes outside of the open enrollment period, unfortunately, you won't be able to change insurance providers to get more affordable coverage. However, you can open a health savings account (HSA) at any time, as long as you have a high-deductible health plan. For 2021, the government defines a high-deductible health plan as any health plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HSA allows you to save pretax dollars from your paycheck for medical expenses. You then can use this money tax-free to pay for qualified medical expenses, in the process reducing some of your out-of-pocket costs.

Find an Option That Works for You

A diabetes diagnosis can be unsettling, but there are ways to manage both your care and the costs of treatment. If you're over 65, Medicare coverage is an option, but you may also need to consider Part D or Medigap supplemental coverage. If you're younger, consider taking advantage of an HSA or use an upcoming enrollment period to shop the market, compare plans and find affordable coverage that reduces the financial costs associated with managing this chronic condition.

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