David Lerner Associates: Healthcare Considerations for Older Americans
At any age, health care is a priority. When you retire, however, you will probably focus more on health care than ever before. Staying healthy is your goal, and this can mean more visits to the doctor for preventive tests and routine checkups. There's also a chance that your health will decline as you grow older, increasing your need for costly prescription drugs or medical treatments. That's why having health insurance can be extremely important.
If you are 65 or older when you retire, you're most likely eligible for certain health benefits from Medicare. But if you retire before age 65, you'll need some way to pay for your health care until Medicare kicks in. Generous employers may offer extensive health insurance coverage to their retiring employees, but this is the exception rather than the rule. If your employer doesn't extend health benefits to you, you might need to consider other options, such as buying a private health insurance policy or extending your employer-sponsored coverage through COBRA, if that's a possibility.
Medicare
Most Americans automatically become entitled to Medicare when they turn 65. In fact, if you're already receiving Social Security benefits, you won't even have to apply–you'll be automatically enrolled in Medicare. However, you will have to decide whether you need only Part A coverage (which is premium free for most retirees) or if you also want to purchase Part B coverage. Part A, commonly referred to as the hospital insurance portion of Medicare, can help pay for your home health care, hospice care, and inpatient hospital care. Part B helps cover other medical care such as physician care, laboratory tests, and physical therapy. You may also choose to enroll in a managed care plan or private fee-for-service plan under Medicare Part C (Medicare Advantage) if you want to pay fewer out-of-pocket health-care costs. If you don't already have adequate prescription drug coverage, you should also consider joining a Medicare prescription drug plan offered in your area by a private company or insurer that has been approved by Medicare.
Medicare won't pay for long-term care if you ever need it. You'll need to pay for that out-of-pocket or rely on benefits from long-term care insurance or, if your assets and/or income are low enough to allow you to qualify, Medicaid.
Unfortunately, Medicare won't cover all of your health-care expenses. For some types of care, you'll have to satisfy a deductible and make co-payments. That's why many retirees purchase a Medigap policy.
Medigap
Unless you can afford to pay for the things that Medicare doesn't cover, including the annual copayments and deductibles that apply to certain types of care, you may want to buy some type of Medigap policy when you sign up for Medicare Part B. There are several standard Medigap policies available. Each of these policies offers certain basic core benefits, and all but the most basic policy offer various combinations of additional benefits designed to cover what Medicare does not. Although not all Medigap plans are available in every state, you should be able to find a plan that best meets your needs and your budget.
When you first enroll in Medicare Part B at age 65 or older, you have a six-month Medigap open enrollment period. During that time, you have a right to buy the Medigap policy of your choice from a private insurance company, regardless of any health problems you may have.
Long-term care and Medicaid
The possibility of a prolonged stay in a nursing home weighs heavily on the minds of many older Americans and their families. That's hardly surprising, especially considering the high cost of long-term care. Many people look into purchasing long-term care insurance (LTCI). A good LTCI policy can cover the cost of care in a nursing home, an assisted-living facility, or even your own home. But if you're interested, don't wait too long to buy it–you'll generally need to be in good health. In addition, the older you are, the higher the premium you'll pay.
Many people assume that Medicaid will pay for long-term care costs. You may be able to rely on Medicaid to pay for long-term care, but your assets and/ or income must be low enough to allow you to qualify. Additionally, Medicaid eligibility rules are numerous and complicated, and vary from state to state. Talk to an attorney or financial professional who has experience with Medicaid before you make any assumptions about the role Medicaid might play in your overall plan.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
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These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Some of this material has been provided by Broadridge Investor Communications Solutions, Inc.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
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