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Health care costs continue to rise and as we age we need to use more health care

It would be an illusion to believe that health care cost increases were a temporary¬†phenomenon. Unfortunately, that’s not the case‚Ķthe cost of medical care has¬†outpaced inflation for the past 20 years and predictions are that medical and long-term care costs will continue to¬†increase in the future.

The decisions we make as to how and where we live in retirement are unique to each individual or couple. The options open to us, however, are frequently determined by our  financial resources…our ability to pay. This review of the various ways to pay for health and long-term care costs during retirement is offered in the hope that it will be of assistance to you as you make decisions regarding your retirement plans.

Retiree Health Insurance Plans:

If your company provides retiree health care  benefits, make sure you know how much of the premium you will be required to pay, as  well as deductible and co-payment requirements. Retiree health insurance plans are generally designed to coordinate with Medicare benefits. Caution: Even if your  employer currently provides retiree health care benefits, there is no guarantee those benefits will be available when you retire.

Medicare and “Medigap” Insurance:

Most people qualify for Medicare insurance¬† when they reach age 65. Medicare helps to protect you from the costs of medical care¬† during retirement. One fact, however, is evident‚Ķthere is no “free lunch.” You will have¬† costs related to medical care and the likelihood is that those costs will continue to¬† increase each year.

Medicaid: Medicaid is a joint Federal and state program that helps with medical costs¬† for some people with low incomes and limited assets. Medicaid is essentially a safety¬† net for those who didn’t adequately plan for their financial needs in retirement, or who¬† encountered unexpectedly large expenses that depleted their financial resources.

Long-Term Care Insurance:

Long-term care insurance can put you in control,  preserving your assets and dignity, while allowing you to select the type of facility and  setting in which you want to receive long-term care services, if needed.

Personal Savings:

Review your retirement plan to make sure that it adequately takes  into account the potential costs of medical care and long-term care in retirement. If you  find a shortfall, you may want to increase your personal savings now in order to have
sufficient funds available after you retire.

 Home Equity:

Many retired people have built up substantial equity in their homes.  There are a variety of ways to tap that equity if needed to pay for health care costs in retirement.

Going Back to Work:

When it comes to planning for health care needs as we age; ¬†it’s¬† time for a reality check. How many 75 year olds want to go back to work?

You may ask questions in the comments or contact me privately Tim Barton, ChFC

© 2012 VSA, LP

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