How Much Will You Spend on Healthcare In Retirement?

By L.A.S.

Will Medicare really cover all or most of your health care expenses while you are retired? I witnessed the bills and stress that my parents went through after my father retired, and I am pretty sure that the answer is no.

The most recent surveys of annual out-of-pocket expenses for seniors show that seniors pay anywhere from $3800 to $8300. Again, this is OUT OF POCKET expenses. This does include your premiums for Medicare, which seem to increase every year.
The truth is that seniors spend MORE on out-of-pocket health care expenses than any other age group. Seniors 65 and over spent an average of $4888 per year on out-of-pocket, according to a 2004 study; that included deductibles, copays, insurance premiums, and miscellaneous expenses not covered by insurance.

I might as well take the opportunity to remind you that Medicare does not cover hearing aids, dental care, or vision needs. My mother was actually rather lucky that she had gotten dentures rather early in life and so did not have the rude awakening as to how expensive dental care has become.

Breaking down the senior demographic into smaller divisions shows that the older you are, the worse it gets. Those 65 to 74 spent $3850 a year; those 75 to 85 spent $5060 a year; and those 85 and older spent $8300 a year.

Try to stay out of the hospital. The deductible for a hospital stay under Medicare was $1068 in 2009. If you are unlucky enough to stay in the hospital for more than 60, you will then incur daily charges of $267 a day. After 90 days as an inpatient, those daily charges increase to $534. As a practical matter, the hospital and your doctor will do all they can to get you transferred to an intermediate care facility or released to your home. By an intermediate facility is meant a rehabilitation hospital, a day-care facility, or perhaps an assisted living home.

Medicaid was never intended to pay for long-term care in a nursing home. However, seniors have hit on ways of spending themselves down to poverty-level in a way that allows them to stay in a nursing home they already live in. These strategies include but are not limited to: divorce, transfer assets to children, or setting up irrevocable trusts.

Transferring assets to children is becoming less and less successful with increasing “look-back” periods for determining if you are trying to hide assets. You are subject to a five-year “look-back” period by the state in which you live, and any tangible assets that have been transferred during that time (especially cash, stock, real estate) Medicaid will add to your list of assets.

Seniors eligible for long-term care under Medicaid can keep a house and car, but the house's value is limited to $500,000. The cash assets cannot exceed $2000 for singles and $3000 for couples.

Insurance Agents Don't Want to Scare Off Seniors with Too Much Information

by L.A.S.
I am going to assume that older readers out there will take offense at this. But financial advisors assume that seniors' decision-making skills will decline with age even if one does not have Alzheimer's or any other form of dementia.

Our brains temporarily store incoming streams of data -- numbers, words, phrases, pictures, and so forth -- while at the same trying to decide which of these data is important to us, to our own situation and values. We quickly go through processes of comparison and ranking of these bits of data. We also compare what is coming in to our own 'data banks', in other words what we have learned to be true about the world in general and about managing money in particular.

Brilliant people can juggle more bits of data than the rest of us. But all of us experience a bit of a slowdown in this process as we age. We can easily miss important facts because we are still trying to hold onto as many information bits as we can handle. We also tend, as ALL of us do, to look for the easy solution, which may not be in our best interests. As we get older, we also are more easily distracted or interrupted, so that we have to start over.

Seniors tend to compensate by taking more time to make a decision. This is perfectly all right. However, most sales people know that the decision delayed, is the decision NOT MADE. So give yourself a deadline to make a final decision. Write out what you feel you need to know to make an informed decision, then when you have gathered that information, sit down with your significant other and discuss what looks best for you.

My personal experience is that I can never find the absolute perfect choice, even when selecting so mundane an item as my apartment. I have to decide based on the best overall package of location, cost, space, and other amenities. I have made errors even after all that, but it is the best I know how to do.

Which features of a policy, annuity, or other financial package are MOST important to you? Weed out those options that do not offer them, but perhaps you might call the company rep to make sure that this is the case. The company might have another group of options that they did not even think you would be interested in.

I might mention that some features are not commonly advertised and you might not even know they are out there. For example, many insurance companies have policies with a return-of-premium rider. (This may be true of some term life insurance and of some 'dread disease' policies; the premiums are somewhat higher but the fact that it is virtually free after the return of your money, makes them very attractive.) A company may be allowed to offer certain riders in one state but not in another, but that is out of our control.

An example of a weeding-out process with annuities would first ask if you need it for an immediate payout, for the near future, or for 20-30 years from now. If tax considerations (for the beneficiaries) are paramount, then you might consider buying insurance instead. BTW if you cannot qualify for a long-term care policy, then maybe you could look into raising the value of your current life insurance if it has an accelerated benefit option.

To help you with the information-gathering phase, you might avail yourself of free lectures given by local banks or savings & loan offices. I went to one such lecture several years ago about the Roth IRA when that was a new option. I took notes and kept them for reference. Keep a notebook of notes taken at such lectures or seminars, so you can draw upon them when sorting through company offers.
Good luck!

SEC Files Against Prime Capital

by L.A.S.
It just goes to show that wherever there's a free lunch, you're paying for it in the end.
Prime Capital Services, Inc., was named in a complaint filed by the SEC. Prime Capital allegedly lured seniors into buying unsuitable annuities with free lunches as bait.
Customers were told they could access their investments whenever they needed funds, but Prime Capital omitted informing them of fees for early withdrawals above a certain amount.

Texas Proposes Regulation of Annuity Schemes Aimed at Seniors

by L.A.S.

Texas bill HB 961 and SB 2650 would regulate maturity dates on all annuities sold to seniors. No longer can insurers set the maturity date as high as 115. Such unreasonable maturity dates force beneficiaries to pay high surrender charges in order to settle an estate.

The bill would also allow the Texas Department of Insurance to investigate any pattern of conduct by carriers that may violate this regulation, and empower the agency to issue 'cease and desist' orders.

Florida Bill Regulating Annuities Dies in Committee

by L.A.S.

A proposed bill that would require annuities sold to seniors to provide a 60-day “free-look” period died in committee. The bill was labeled SB 724 with the companion House bill labeled HB 141.

Even though the billed died in this session of the state congress, it could be resurrected in the next legislative session.

Provisions of the bill include not only the above clause, but also: would allow return premiums on said annuity sale for 60 days after purchase; no surrender charges after the fifth year of an annuity contract; bars family members of an insurance agent from being beneficiaries of an insurance policy.

The bill also would tighten standards of conduct for insurance agents by: expanding grounds for suspension or revocation of a license; in cases of “twisting” or “churning” of policies belonging to clients age 65 or more, such practices would become third degree felonies.

Seniors Will Have Fewer Agents Calling and Knocking

by L.A.S.

Revised rules governing marketing to seniors have put a crimp on cold calls by insurance agents. No longer may insurers call or knock on doors of seniors who are not already policyholders with their company. That includes a ban on calling former policyholders and referred prospects.

This will make it harder for people just turning 65 to find and compare different supplemental plans. However, since 64 percent of seniors already go online to compare and research insurances, that avenue will only grow.

Insurers will need to provide senior-friendly web sites that allow visitors to choose their type size and increase contrast. The web site should also give you a way to request more information, such as a request form online to receive a packet of Medicare-supplemental information brochures or booklets.

It makes for a kinder and gentler selling and buying environment.

What features should you look for in a Long-Term Care insurance policy?

You have finally decided to bite the bullet and check around for a long-term care policy for yourself or a loved one. But where do you begin? What features should be included in a plan?

You do not have to re-invent the wheel when seeking a LTC policy. The folks at the National Association of Insurance Commissioners (NAIC, found online at NAIC.org) have kindly provided a mini checklist for your benefit. The list includes:

• 
  At least one year of nursing home or custodial care, and should also include intermediate care.
  You probably want home health care included, too. Home health should not be limited to skilled care (meaning a registered nurse). You will probably need to call in unskilled help to assist with household chores, to help bathe and feed your loved one, or any of the myriad things that need to be done.
• 
  Coverage for Alzheimer's disease, if the policyholder develops the illness after the policy is issued.
• 
  Inflation protection option. No one knows just how expensive it will be ten years from now to keep someone in a decent nursing home; prices have risen sharply over the past ten years for all health care. It will cost you more to have this rider or option.
  The insurance carrier is obligated to provide you with a free copy of the “long-term care insurance shopper's guide”. They prefer to hand this out after you have signed on the dotted line for an application, but you are NOT obligated to buy or express an interest in buying, in order to get this booklet.
• 
  A guarantee that the policy cannot be canceled, nonrenewed, or otherwise terminated because you get older or develop a chronic illness/serious disease.
• 
  You have the right to a 30-day period – known as a 'free look' – in which to examine the policy and return it if it does not seem to be what you wanted. The insurer will return your check. This is a standard provision, not a gift from each insurer, but do mention it anyway.
• 
  There should not be any requirement such as the following: that the policyholder first be hospitalized before admission to a nursing home in order to be covered; that the policyholder first receive skilled nursing home care before entering an intermediate or custodial nursing home; or that the policyholder first receive nursing home care before receiving benefits for home health care. Why are these important? Because most people prefer to keep a loved one at home for as long as possible before finally transferring him or her into a nursing home. These provisions we have listed all are intended to keep someone in a healthcare facility of some kind rather than at home.
• 
  In addition, you might see a 'waiver of premium' rider. This allows you to stop paying premiums during the time you are receiving benefits. Read closely to find what restrictions there are on this rider. Commonly, you will have to be in a nursing home for 90 days before the waiver goes into effect.
• 
  Pre-existing conditions. Insurers usually say in the policy that pre-existing conditions are excluded for 6 months or a year. However, often they will simply not write a policy for someone with certain diagnoses. For example, I once tried to get a long-term care policy for a lady who was 72, in great shape – but underwriting turned her down because she had diabetes. Even though her condition was controlled and her weight was in the normal range, they felt her disease was progressing enough so that they did not want the risk. Also, some diseases may be quite common in your state and some insurers will not cover it. In Minnesota, multiple sclerosis is quite common (statistically speaking) and so it is excluded from dread disease policies. (In other words, if you have a family history of this disease, move to another state if you want to buy a dread disease policy.)
• 
  What exclusions are in the policy? It is common that injuries or illnesses that result from self-inflicted causes are excluded. But you may be surprised that those who have a history of drug or alcohol abuse will also be excluded from coverage if their condition is deemed related to that history. (Example: liver disease, brain damage from a drug overdose, etc.)
• 
  Possible return of premium. Some policies allow you to get a healthy refund of premiums paid if you do not use the insurance provisions or decide to cancel. You will not get 100 percent of your premiums back. You will however pay more for this rider. Why would you want this rider? If at some point you can no longer afford the premiums, or some other option opens up for you that will replace the coverages of this policy, you could decide to cash it in, so to speak, and use the cash to buy into another coverage.

People generally buy far too much long-term care insurance. From the statistics that I have seen, most people only spend one, two, or three years in a nursing home. And yet people are terrified of the possible expenses of spending twenty years in such a facility.

Although I personally know of a classmate's father, an Alzheimer's patient, spending six years in a nice facility, he was not the norm. He was a big, strong guy before he came down with the disease, and he died as result of complications of pneumonia.

On the other hand, my own grandmother only spent about six months in a skilled care facility before she died. But you have to play the odds here, the reasonable odds. And most likely, three years of nursing home care is all that one can reasonably be expected to afford premiums for.

My other recommendation, as a past professional in the area of senior products, is that IF you cannot get a long-term care policy due to health history or whatever, then increase your life insurance coverage to the most you can reasonably afford. Most life insurance policies are 1) cheaper than LTC policies, 2) easier to get than a LTC policy, and 3) have acceleration of benefit provisions so that if you are diagnosed with a terminal illness or have to go into a nursing home, you can draw upon the policy limits. At the very least, you can put up the life insurance policy as a form of collateral on the final bill from the nursing home.

SEE ALSO:
America's Health Insurance Plans (AHIP) – online at AHIP.org; they have an office in Washington, DC.
American Health Care Assn. -- 1201 I (as in Illinois) Street NW, Washington, DC 20005, 202-842-4444, or online at ahca.org.
National Assn. Of Insurance Commissioners (NAIC) – 2301 McGee Street, Suite 800, Kansas City, MO 64108, 816-842-3600, or online at NAIC.org.
National Council on the Aging – 300 D Street SW, Suite 801, Washington, DC 20024, 202-479-1200, or online at NCOA.org.
Area Agency on Aging – 1-800-677-1116 to find a local office.

Is there a “Right” to Medicare? Should 'Grandma' Pay for Her Own Cataract Surgery?

There has been quite a rumpus in articles about whether Medicare should refuse to pay for certain procedures due to the financial straits it once again is in.
In other words, do well-off seniors have the right to have Medicare pay for procedures that they could afford to pay out of pocket? And would this really help Medicare’s financial predicament anyway?

From someone called

the Happy Hospitalist believes that it is time to “say No” to seniors. “No to dialysis. No to life support. No to elective procedures [which would include artifical hips and knees] . No to brand name drugs. No to the latest expensive technology. We will have to place greater weight on quality of life over quantity of life. We will have to demand hospice care in futile situations. We will have to demand palliative comfort over slice and dice. We will have to reject marginally effective proceduralization and imaging of our elderly. We have to. We don’t have a choice. There is no other way.”

When I look at this list I agree on some items. “Futile care” is clearly unnecessary care. But often, we don’t know whether or not it will be futile. Every day elderly people do emerge from ICUs and go home to play with their grandchildren. As for “brand new drugs,” and “the latest expensive technology” regular readers know that I believe that everything depends on whether the new technologies have been tested and proven effective. We cannot afford to squander Medicare dollars on drugs, devices and procedures without knowing whether the patient will benefit. And I certainly prefer palliative care over “let’s try another surgery. Can’t do any harm.” (Except to the patient who suffers through it).

I agree with some measures but not others. Maybe all these joint replacements are unnecessary because we have been going about it all wrong. But cataract surgery keeps seniors active and involved and self-sufficient -- those are good things, dammit.
http://www.healthbeatblog.org/2008/08/do-seniors-have.html#more