Dear John,
With healthcare on everyone's mind today, have you done any planning for your healthcare needs during retirement? If not, this issue is for you.
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| Healthcare During Retirement
Start your planning now before you need it. |
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If you haven't planned for retirement healthcare, by all means you should start your research now. Private insurers do not offer health insurance plans beyond age 65. Medicare is the federal program developed to cover these needs. Net federal spending on Medicare is estimated to be almost $500 billion by 2010. Even with this subsidy, the average Medicare enrollee pays over $4,000 per year in out of pocket expenses.
Please be aware that MEDICARE DOES NOT PROVIDE CATASTROPHIC COVERAGE. Based on figures from 2005, you would owe $80,112 if you were to spend 6 months in a hospital, unless you had purchased supplemental private insurance call Medigap. Beyond 365 days, you are responsible for the entire cost of hospitalization, which was $1,500 per day in 2005. Note that HOSPITAL STAYS ARE CUMULATIVE over the life of your Medicare coverage.
Make sure to investigate Medicare Part D, which was introduced in 2006 to assist with the cost of prescription medications. This plan is such a good deal for around $40 per month that everyone on Medicare should enroll, especially since the cost is increased for each month you delay. Unless you have other coverage, you should enroll for the insurance protection alone, even if you are not taking prescription medications at the time.
Also note that MEDICARE DOES NOT PROVIDE FOR LONG TERM CARE, ranging from in-home assistance for the needs of daily living to full-time nursing care. To prepare for the cost of such long term care events, consider the options discussed below. |
| Have you planned for long term care?
There are options, but none of them are attractive. |
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About 10 million Americans receive long term care today. About 65% of them are elderly and 35% are those with lifetime needs (e.g. from birth defects or traumatic injuries). About $200 billion is spent on this per year, with 40% paid by Medicaid. Medicaid is a welfare program providing medical and long term care to those with very small incomes and assets.
The average nursing home costs over $100,000 per year. In-home assistance with the needs of daily living would cost over $20,000 per year, if you could get the assistance for $400 per week. Around-the-clock in-home care would cost $200,000 per year for a home health aide, and $400,000 for a nurse. There are four basic ways that people finance this need for long term care: family support and caregiving, personal savings, reverse mortgages, and private long term care insurance.
Unfortunately, the long term care insurance marketplace is one of the worst marketplaces for insurance in America. Fortunately, it has improved every year since it started in the mid-80s, and particularly since HIPAA established qualifications in 1996. A study by Consumer Reports concluded that for most people long term care insurance is risky and too expensive. However, the same study concluded that while many long term care insurance policies "may be a lousy deal right now, they are just about the only deal."
If you decide to consider long term care insurance, you should wait until your 50s or 60s, unless you have reason to be concerned about your health. In that case, you should consider it sooner to protect against becoming uninsurable later on. |
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BudgetLife.com, on the Internet since 1996, provides consumer services for mortgages, insurance, and annuities. As independent agents, we have access to hundreds of lenders and insurance companies. So consumers will always receive the absolute best deal available for their financial needs.
Best wishes from our family to yours,
Christopher Burt
BudgetLife Financial Services
(800) 705-3799 | | |
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