And it's something many seniors wind up facing.
Maurie
Backman Sep 26, 2019 at 5:09AM
If you're new to Medicare, or are planning to enroll in the
near future, it's imperative that you understand how the program works and what
it costs. For example, some people incorrectly believe that Medicare is free,
when, in fact, it's only Part A, which covers hospital care, that
doesn't charge participants a premium.
Not only is Medicare not free,
but your out-of-pocket healthcare costs in retirement could wind up being far
more substantial than you'd think due to the number of services Medicare doesn't cover. For instance, dental exams
aren't picked up by Medicare, and neither are vision services or hearing aids.
But if there's one major non-Medicare-covered expense you really need
to watch out for, it's none other than long-term care.
What will long-term
care cost you?
Many people assume that Medicare will cover the
cost of nursing homes or assisted living facilities, but it won't. While the
program will pay for a limited stay in a skilled nursing facility, it will only
do so if your condition is expected to improve and is related to a medical
issue or injury.
However, Medicare won't pay for what's known as
custodial care -- help you need to function. For example, many people wind up
in nursing homes or assisted living facilities not because they're ill or
injured, but because their bodies no longer function the way they used to, and
their mobility is therefore limited. That's where long-term care comes in, and
it's an expense you'll generally need to face without any help from Medicare.
Unfortunately, it can be an astronomical one at
that. The average annual cost of an assisted living facility is $48,000 on a
national level, according to Genworth's 2018 Cost of Care Survey.
Meanwhile, the average national price tag for a shared room in a nursing home
is $89,297 a year. And for a private nursing home room, it's $100,375.
Home health aides, which Medicare also won't
cover if they're needed for custodial care purposes, can be a fortune, too. The
average yearly cost of a full-time home health aide is $50,336.
That's why it's crucial that you plan for the
enormous expense that is long-term care. Though it's impossible to predict
whether you'll need that care or to what extent, you're far better off being
safe than sorry -- especially since Medicare can't bail you out.
Planning for long-term
care
If the thought of paying for long-term care is enough
to send your stress levels through the roof, then it's imperative that you come
up with a plan for addressing that need. Your best bet in this regard is to
purchase a long-term care insurance policy, and the best
time to apply for one is during your mid-50s. At that age, you're not only more
likely to get approved, but you might snag a health-based discount on your
premiums, thereby making your policy more affordable.
At the same time, it pays to boost your savings
so that you have funds available to cover long-term care down the line. In this
regard, you have several options. You could ramp up your contributions to your
general retirement savings plan, whether it's an IRA
or a 401(k), or you could fund a health savings account (HSA). The latter
hinges on eligibility -- to qualify, you must have a high-deductible health
insurance plan and meet other requirements. But if you grow enough savings in
an HSA, you'll have a dedicated source of funds earmarked for healthcare
expenses in retirement, long-term care included.
Though Medicare provides a host of key health
benefits for seniors, it won't foot the bill when it comes to long-term care.
Planning ahead for that expense could save you a world of financial stress and
upheaval should the need for it arise at any point during your golden years.
The Motley Fool has a disclosure policy.
No comments:
Post a Comment