Health Care Reform
How do the current trends impact those nearing retirement (Medicare) age?
As implementation of the Affordable Care Act (Obama Care) moves forward, the anticipated effects on different populations continue to provide ammunition to proponents and opponents alike.
However, what’s not up for debate is the very real impact that the $716 billion in Medicare spending cuts will ultimately have for those currently on Medicare and those approaching coverage under Medicare.
One measured approach suggests that as reimbursement rates to providers are cut, more providers will stop accepting new Medicare patients. We are already seeing more and more doctors moving toward concierge practices.
These costs exacerbate a looming issue highlighted in a recent budget and economic outlook from the Congressional Budget Office that projects the three largest mandatory spending programs (Social Security, Medicare & Medicaid) will grow to 55% of federal spending in 10 years. The pressure put on other programs, taxation, and costs will have significant impact on the national economy as well as our own personal economic futures and planning.
Long Term Care (LTC)—Have you given this serious thought?
It is never too early to best understand the facts surrounding your need to plan for Long Term Care. Consider the following key facts.
- Fact: Statistically, we have a 70% chance of needing Long Term Care in our lifetime.
- Fact: It is NOT covered by your traditional health care plan or Medicare.
- Fact: The cost of Long Term Care is considered by most financial planners to be the #1 financial risk to our retirement years.
Don’t expect any help from the government on this program. Long Term Care was originally a part of the Obama Health Care Reform plan; however it was cut early on when lawmakers understood the significance of the number of people who will need care, considered alongside the funding required to provide such a benefit. The looming cost for Baby Boomers’ Long Term Care is astronomical.
Today’s Long Term Care plans are Tax Qualified which means the premiums are tax deductible. Current plans are Comprehensive (covers in-Home and in-Facility Care), and they offer guaranteed built-in inflation protection for the life of policy, which proves to be of great value to those starting their planning sooner, rather than later.
Unfortunately, we are seeing market trends which may eliminate the “stand-alone” planning option. LTC carriers are looking to better control their risk by offering LTC protection as a rider/supplement to other products like Life insurance and Annuities, rather than a stand-alone plan. Although this option may be suitable for some, these LTC rider products require a more significant initial investment and offer less benefit options than a stand-alone plan.
- Fact: With inflation, in 30 years, you can expect to pay an average of $1 million for just 4 years of Long Term Care (considered today’s average care need).
If you have questions about your own situation and would like more information on Long Term Care planning or health insurance, contact Marc Haberman.
