Seniors who are counting on Medicare to cover healthcare costs in retirement, are in for an unpleasant surprise that will likely take a huge bite out of their retirement savings.
Even seniors who buy optional Medicare supplementary plans, face healthcare costs that can easily decimate their retirement savings, according to a recent article in The Motley Fool, “3 Reasons Seniors Can't Count on Medicare to Cover Health Costs.” Healthcare costs for seniors could run as high as $350,000 during the course of a couple’s retirement years, not including long-term care costs. If Congress makes changes to Medicare, expect costs to skyrocket.
Here are three big reasons you can't count on Medicare, if you have costly health issues after age 65:
1. Medicare’s coverage of long-term care coverage. About 70% of seniors will need long-term care during their lifetimes, which will be needed for an average of three years. However, Medicare most likely will pay nothing toward this care. It just covers skilled nursing care and provides this coverage, only if you have a qualifying hospital stay. Most seniors need custodial care or routine help with daily activities like bathing or preparing food that necessitate long-term care. Custodial care isn't covered by Medicare, Medicare Advantage or Medigap policies.
Medicaid will pay for nursing home care, but you'll have to spend down to qualify because of Medicaid's eligibility requirements. You may need an asset protection plan to do this, so talk with an Elder Law attorney.
2. Medicare’s high coinsurance costs. Medicare doesn’t provide 100% coverage for healthcare services, even when it does cover your care. If you need hospital or inpatient care (covered for by Medicare Part A), you'll need to pay a $1,316 deductible (in 2017). If you're in the hospital for more than 60 days, your copay will be $329 per day or more depending on the length of your stay.
Medicare Part B covers routine care like doctor visits and durable medical equipment. It also charges a co-pay of 20% for services and Medicare Part D plans for prescriptions may require costly premiums, with deductibles up to $400. It may also have a co-pay based on the tier of a covered drug. Medicare Advantage plans or Medigap plans may pay part of the co-pay costs, but this means paying extra premiums, with most of these plans still requiring beneficiaries to cover some of their care expenses.
3. Medicare’s future. Medicare is financially troubled. A recent report from the Medicare Board of Trustees' revealed that the Hospital Insurance Trust—which covers Medicare Part A expenses—is expected to be depleted by 2029. Financing will need to grow at a faster pace to keep up with projected expenditures.
The best way to protect yourself and your family is to educate yourself about the coverage limitations of Medicare and plan ahead of time to handle the costs. Even if you are healthy now, be prepared if and when your health or your spouse’s health status changes.
Reference: Motley Fool (November 12, 2017) “3 Reasons Seniors Can't Count on Medicare to Cover Health Costs”