Planning For Health Care In Retirement- Part III

Plan for long-term care

The biggest retiree medical expense which is the long-term care is normally not covered by Medicare. Just to give an idea of the cost involved let us look at the numbers. As per Genworth Financial survey a room in a private nursing home last year cost an average of $76,460 a year which is $209 per day. Again costs differ in different states and can start from an average of $125 a day in Louisiana to $515 in Alaska. There are other not so expensive options but even they don’t come in retiree budget. Per hour on an average home-health aide cost $19 which by simple compounding amounts to $43,884 per year for 44 hours a week of care. One needs to shell out on an average $36,090 annually for a private one-bedroom unit in an assisted-living facility. Adult day care costs $15,236 per year, on average, for care five days a week as per survey done by Genworth Financial.

So how do you pay such hefty long term care bills. The best way would be to take long-term care insurance. As per AARP estimates to take a policy that covers long term care expense a 65-year-old will have to pay anything between $2,000 and $3,000 a year. As per calculations from Fidelity Investments for a couple both 65 years of age in 2008 to insure against a lifetime long term care expense would need to take a policy of $85,000. In short long term care insurance doesn’t come cheap. Hence it is best to evaluate long term care insurance policy carefully before taking it. Check out on factors like cancelation of policy terms, premiums, renewal, length of coverage and maximum payout before taking the policy. These policies are quite complicated and written quite extensively on what is covered but few years later when you actually start using long-term-care services you may find that some elements are not covered. Hence it is very important to go through the blueprint of the policy carefully. It is also important to check on the financial stability of the insurer to make sure that the insurer is capable of meeting your claim. Financial health of the insurer can be checked  either by rating of agencies like A.M. Best, Moody’s, or Standard & Poor’s  or you can check with your state insurance department.

Take care of your health

Of course the best way to meet the rising cost of health care would be to take good care of your health. A good health diet, plenty of exercise and a stress free life will go a long way in keeping you health and hence reducing your medical bill. Many retirees who cannot afford health care simply stay without it. For instance study conducted by Kaiser Family Foundation study reported that some Medicare Part D enrolees who could not pay the bill in prescription drug coverage just stopped taking their medicines. In a survey conducted of people who are suffering from chronic conditions and taking medicines 10 percent stopped taking oral anti-diabetic drugs, 18 percent stopped taking osteoporosis medications, and 20 percent stopped the usage of proton pump inhibitors to reduce gastric acid. Stopping medication is not solutions rather it will only aggravate the problem as not paying attention to a chronic condition will only aggravate the condition and will mean bigger health care costs in the future.

Read more at: Planning For Health Care In Retirement- Part II