Medical Expenses - Even With Medicare

 

It probably comes as no surprise that a top concern of retirees is the unknown cost of ongoing and future health issues. Even with Medicare or Medicare Advantage, private insurance through a former employee, or some other way of paying for health costs, many of us are not fully prepared. We may be in for a rude awakening over what lies ahead.

Recent studies tell us that up to $300,000 in costs are is 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 policies. Moving into an assisted living facility can easily cost $4-$5,000 a month. A nursing home might be closer to $7,000 every 30 days. Medicare covers your residence in such a facility for only a limited period of time each year.

When my mom went into such a facility,  I remember she had a change rooms from a Medicare-covered to a non-covered room after just a few months. 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. You could face either large premium increases every year or the company leaving that segment of the insurance market completely.

Vision and dental care are expensive and not covered by traditional Medicare. True, some Advantage policies offer these services but usually require visiting a tightly controlled network of providers. Hearing aids? Not covered by Medicare. These three expense categories can add up quickly. 

A part D drug coverage policy does make the expense of many prescription drugs reasonable. But, there are still co-pays and deductibles. Newer drugs aren't necessarily covered right away. And, because Part D coverage is provided by private insurance companies, they can assign certain drugs to the highest cost category or deny filling a prescription without an appeal process and approval. 

More than half of us fear falling victim to Alzheimer's or dementia more than any other health issue, even cancer, heart issues, or stokes. Another study tells us that most retirees fear medical debts may overwhelm their finances, with up to a quarter of us already in trouble due to medical bills.

The good news in a not-so-good scenario is that Medicare does cover a good portion of both the in and outpatient costs of dealing with these debilitating diseases. 

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, a position of 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.

Remember that $300,000 cost cited earlier for a typical couple after age 65? Well, assume an average life expectancy of twenty more years, and your budget must cover $15,000 a year, and that does not include nursing home costs, long-term in-home care, or long-term insurance.

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. Too many issues we face, however, cannot be avoided just by doing extra situps or laps around the track.

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 or have a vacation home in Vail.

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 potential of the best medical care possible, it brings with it financial hardships or even ruin if someone isn't prepared.

After several years of Medicare, a Medigap policy, and drug coverage, I am pleased with the large reduction in my medical costs compared to previous years.  We are both relatively healthy and have avoided expensive problems or costly drugs. 

However, even with those policies in place, we still spend over $9,000 a year in health care costs, and that figure will only increase. Thinking even ten or fifteen years down the road I wouldn't be surprised if we see our yearly costs almost double. I am aware of what may lie ahead and am doing my best to protect Betty and me from a rocky financial future.

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