By Bill O'Quin
It would be nice to believe that health-care cost increases were a temporary phenomenon. Unfortunately, that’s not the case. The 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 escalate into 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. The following are various ways to pay for health and long-term care costs during retirement, which can help 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.
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Medicare and “Medigap” insurance: Most people qualify for Medicare insurance when they reach age 65. Medicare helps protect you from the costs of medical care during retirement. One fact, however, is evident: There 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.
( Not Applicable in Malaysia )
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 70+-year-old people with health problems really want to be out looking for a job?
Don’t wait until it rains to start building your ark. Plan ahead while the choices are still yours to make! Contact your agent or financial advisor for help with this type of planning.
* Do have question regarding long term care insurance, please do not hesitate to get to me @ firstname.lastname@example.org
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