April 11, 2015

Medical Bills After Retirement: Be Prepared



It probably comes as no surprise that the number one concern of retirees is the unknown cost of on-going and future health issues. Even with Medicare, private insurance through a former employee, or some other way of paying for health costs, many of us are unprepared and in for a rude awakening over what lies ahead.

Recent studies tell us that up to $300,000 in costs are very possible for those over age 65. Don't we assume that with Medicare, a Medigap policy, an Advantage option, and drug coverage that can't possibly be right? 

Unfortunately, the most expensive parts of our health costs aren't covered by those items. Moving into an assisted living facility can easily cost $3-$4,000 a month (or more). A nursing home might be closer to $5,000 a month. Medicare pays nothing, or for only a limited period of time. If you elect to stay in your home you will still need expensive on-site nursing and custodial care that can cost about the same as being in a facility. Research shows 70% of us will need either short and long term care at some point.

True, you can buy a long term insurance policy, but they are quite expensive, and usually have a waiting period before payments start. They are dependent on the insurance company staying in the long term care business, not a sure thing as costs outstrip their ability to generate sufficient return on their investments. 

A report from last September in USA Today provides a sobering look at our concerns. More than half of us fear Alzheimer's or dementia more than any other health issue, even cancer, heart issues, stokes, or arthritis. Another study tells us that the majority of retirees fear medical debts may overwhelm their finances, with up to a quarter of us already in trouble due to medical bills.

So, why am I detailing these scary numbers and scenarios? Because being prepared and facing reality are our best weapons. To have a satisfying retirement denial is not going to work. Facing the financial possibilities of health costs down the road now will help you if, and when, it occurs. 

Obviously, we must do our part to stay as healthy as we can as long as possible. Medicare or Advantage plans offer plenty of free or deeply discounted ways to stay on top of our health and take steps to short-circuit problems. 

From a financial standpoint, a line item in our budget must include reasonable projections for future medical costs. Forgoing some present pleasures may be necessary to help with future expenses. The health care center won't offer much sympathy when you tell them you can't pay their bills because you took a month-long cruise down the Amazon.

The health care system in the United States is unlike any other developed country. We have a for-profit approach to health care. While that provides for the best medical care possible, it has the very real potential for financial hardships or even ruin if someone isn't prepared.

After a full year of Medicare, a Medigap policy, and drug coverage I am very happy with the large reduction in my medical costs compared to previous years. But, I am aware of what may lie ahead and am doing my best to protect Betty and me from a rocky future. 

I'd rather spend the money on something else, but health care savings have become part of our life. That is our responsibility.


23 comments:

  1. Bob, you've certainly hit a nerve with this post! I'm amazed at the disparity of medical costs across our country. Fee schedules can differ greatly. Some small community clinics and hospitals actually charge more than the finest facilities around. My parents' local clinic charged more for their regular checkups than the Mayo Clinic charged. Whenever possible, it pays to inquire about the costs so you can make wise choices. If you're in an emergency situation, your choices are limited--you go to the closest ER and hope for the best. Once you're out of danger and the bills start rolling in, it's enough to send you back to the ER! After looking after my parents' medical expenses and double checking on some of those suspicious line items, I believe the best defense is information. It wasn't much fun, but I'd go through their bills, double check dates of service, services provided, etc. It was not unusual to find multiple billing errors, and most providers are more than willing to make the necessary corrections. This might sound cheap, but having a "hospital kit" ready to take along for hospital stays can really save money. The kit simply contains all the personal toiletries needed, the patient's regular prescriptions, and a pair of warm socks w/rubber grips on the bottom (don't laugh, most patients suffer from cold feet and hospitals often charge a fortune for these). Granted, many hospitals go ahead and charge for all those toiletry items, so you might have to make a follow up call to clarify that the patient provided their own toiletries, but it's well worth the effort. You can save $100s of dollars doing this. It's important to have an advocate. Often a spouse, child or close friend is willing to fill this role. Recently, I had some dental work done and the cost boggled my mind! I needed a bridge, which was not covered under our insurance. However, when I asked if there was a cash discount, they reduced my bill by 10% (better than nothing). I appreciate this post and look forward to reading the comments!

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    1. All excellent points and suggestions, Pam. When hospitals can charge $50 or more for a " "hydration kit" (small plastic pitcher and water glass), we are really on our own to protect ourselves.

      When most of us had 100% of these costs paid by a company's medical plan, there was no reason to pay much attention. But, now that so much of the cost has been shifted to the patient, it is very wise to realize where the money goes. It also shows us how out of whack our for-profit system is.

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  2. Ken and I qualified for ACA (Obamacare) this year but when we hit 65 and go to Medicare, the cost of that plus a supplement will be more than what we are paying right now.I am going to enjoy this nice respite of low premiums! For dental care ,if I need something major I may consider Mexico.The folks at Wheelin' It have a couple of great articles about it.

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    1. I know several folks who go to Mexico on a regular basis for everything from dental cleanings to crowns, and prescription drugs. For those of us close enough to the border, the clinics and doctors close to the borders of San Diego, El Paso, or Nogales are usually very similar in quality and care to their U.S. counterparts at much lower costs.

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  3. As someone who can provide a comfortable lifestyle in the near future, I find the tension between enjoying today vs providing for an unknown future one of the great challenges of aging. LTC insurance out of reach. My friends dropped a policy they had for 10 years when premiums doubled. All I can do is live a reasonable life now, hope for the best, and that my coffin is not lined with dollars.

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    1. The LTC business model doesn't work anymore, for the companies that sell the policies and the customers who pay for coverage that may not exist when needed. I am glad Betty and I decided to pass on buying a policy a decade ago when the subject first came up.

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  4. Deb and I dread eventually having to move to Medicare. We hope and pray that our existing coverage will become our secondary payer, but who knows with the acceleration in changes in the industry. I agree that people need to prepare, but many Americans do not do well in that department, and will depend upon the rest of us to cover their costs. The sad part is that is exactly what will happen.

    Your point around our health system is a valid one. Costs in other countries are substantially lower than our own (I suspect we are subsidizing those low costs for things like drugs by paying such high costs ourselves.) Many Americans will have to evaluate whether it makes sense to move to one of those countries, or travel to them for procedures. It is definitely a brave new world out there when it comes to medical care, especially for the older population.

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    1. I believe you are absolutely right about drug costs, Chuck. Americans pay more than those in other countries. The rationale from the manufacturers is the start up and research costs are huge, and they have to recoup those dollars from those most able to pay. Also, our medical system that is based on the profit of the companies providing the service or products is very different from other countries. That alone insures we will pay much more.

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  5. Like ChuckY, our health care costs increase a great deal this year with the addition of Medicare. There are federal threats that our secondary will disappear in the next few years. That will make for interesting living! We looked into LTC insurance- but those policies are disappearing. My sister's (she is 57) doubled this year!
    We have put aside the $300,000 in a "do not touch" fund for health care in our 80-90's. Part of that is in TIRA's and we will have to take the distributions and reinvest. Silly. If we live past that - all bets are off. I refuse to worry.
    I am just praying we both die quickly in our sleep. AGGGG!

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    1. My Medicare, supplemental, and drug coverage costs are higher than I was paying for the five months I had ACA coverage. But, they are about half what I paid on the individual market for most of my working days with virtually 100% coverage. I love Medicare!

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  6. I am envious of the days when my grandparents retired. They all went to Florida. There were never all these lists of best places to retire etc. Florida was it and they all lived well until they died. Medical costs were not what they are now so they didn't even worry about that. Sheesh.

    Going to go stick my head back in the sand now.

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    1. Things have certainly changed. We live longer, but at what cost to us or our family?

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  7. Thanks for posting on such an important topic. I was surprised to discover that being on Medicare has increased, rather than decreased, my out-of-pocket health care costs. I do want to challenge your assumption (shared by most Americans) that our for-profit healthcare system buys us the best possible medical care. We are *not* getting what we are paying for. Other developed countries not only have lower costs; they also have better health outcomes. For example, the following countries all have higher life expectancies at birth than the United States: Canada, Japan, South Korea, Singapore, all the Scandinavian countries, Ireland, the UK, Austria, Belgium, France, Germany, the Netherlands, Switzerland, Greece, Italy, Portugal,Spain, and Slovenia (source is the Population Reference Bureau 2014 World Population Data Sheet). -Jean

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    1. You are right. I should have said our country has the most technologically advanced medical care system. That does't translate into the system that produces the best life expectancy.

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  8. America, by far, does NOT have the best health care system or outcomes, you are right stepintothefuture. ! Also, our national problem with obesity is creating sicker people who need more "sick care.." from diabetes,lung disease,heart disease. We pay a lot for a little! A lot of self care and good health habits will go further......

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    1. There is no other developed nation that expects its older citizens to spend so much on medical care.

      But, to your point, our lifestyle is responsible for a goodly amount of that cost.

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  9. This post has gotten me thinking. I did some research on the latest facts about Alzheimer's. I had no idea that the survival rate has gone from 8-10 yrs to 8-20 yrs. That's a LONG time---and a huge expense.

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    1. Keeping someone alive because you can doesn't mean you should. Quality of life and the person's wishes should be taken into account. But that is a whole other post and an ethical debate that deserves our attention.

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  10. I'm only paying for my supplement what Social Security charges me for Medicare - $133/month. Since I have no health problems nor do I take any medications I find that my only out of pocket is the copay to see my physician once a year and last year I paid $200 for a colonoscopy (for the facility and pathology). I have no control over unexpected problems but plan to continue to live as healthy a lifestyle as I possibly can. I worked in the healthcare system that I now use for my care so I know the clinicians and the quality of care provided. As a nurse I can participate in my care a little differently from that of a layperson and I'm grateful for that.

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    1. Working inside the system gives you a unique perspective and understanding of how the individual contributes to his own care.

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  11. Well, I just bought a LTC policy last year, so I hope to god you're wrong when you say: "LTC business model doesn't work anymore, for the companies that sell the policies and the customers who pay for coverage that may not exist when needed." Guess I won't know until and unless I ever need it.

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    1. From my readings the LTC industry is struggling and some customers are facing premiums that double from one year to the next.

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  12. To Madeline,(commenter) Taking good care of yourself is no assurance you wont get sick. Two of my co workers who have always been health nuts. walking every day , eating mostly vegetables and fruits, normal weight, did not ever smoke, both died of cancer this year. One had cervical, one colon and bone. It can give you a better quality of life but not always prolong your life.

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