Keeping track of the Affordable Care Act and wondering how, or if, it will impact an individuals’ Medicare or Medicaid coverage is a sometimes confusing maze.
One of the most pressing questions seniors and baby boomers have is “Will the Affordable Care Act impact my Medicare coverage?” and the answer to that is a confusing “maybe.” Because the Affordable Care Act is still a program that is in flux, and because its purpose was to provide healthcare coverage to those who didn’t have it, the way it could potentially impact Medicare and Medicaid have not been fully determined.
Some of the questions that have been raised include:
- Will I have to switch doctors?
- Will it cost me more to pay for a policy under the Affordable Care Act than I am paying now?
- Does this mean that the Medicare program will no longer be in effect?
- If I use a home medical alert device, will that have any impact on the fee I pay for it?
- How will my prescription medications be impacted?
Here are some of the positives that appear to be a part of the Affordable Care Act provisions:
- The money you spend on prescription drugs may be less than you’re paying now
- You should be able to keep your same physician
- Medicare coverage will not go away even if you’re covered under the Affordable Care Act policies. As a matter of fact, the Affordable Care Act law prohibits any cuts to Medicare coverage benefits.
- Annual, free wellness exams will be provided.
- The Affordable Care Act will effectively put an end to the “donut hole” that many individuals found themselves in as it relates to out of pocket costs for prescriptions.
One of the major disadvantages found in the new program is that it will cause a reduction in Medicare spending by more than $700 billion. What does this mean? Some worry that the reduction in Medicare spending could lead to a reduction in coverage standards, however assurances have been made that it shouldn’t. It’s believed that any potential cuts in Medicare will not impact the healthcare quality a patient receives but could be in the form of the way providers receive reimbursement from Medicare.
The Affordable Health Care Act won’t likely make any changes to coverage of or payment for home medical alert devices. In some instances, though, the new coverage may provide a provision for the payment of this medical alert equipment. It’s always best to contact your insurance carrier to gain a clear understanding of the type of coverage you may be eligible for as it relates to this equipment.
Answers to specific questions about coverage and its provisions are best answered by your individual insurance provider or by contacting a Medicare or Medicaid representative.
The Golden Years are the times in our lives when we look forward to enjoying the freedom afforded us by a lifetime of having worked and saved. We anticipate our retirement years as times when we can enjoy the fruits of our labors and spend time in pursuit of hobbies we hadn’t had time for previously.
The truth, though, for many individuals as they near retirement age is that they may not be as prepared as they’d imagined they were, nor have they used their accumulated wealth in the most fiscally sound manner.
Many of us that have reached, or are nearing retirement age, understand that planning for retirement is difficult, but living in retirement can be even more of a challenge. There are steps that can be taken, and retirement myths that must be debunked for those of us that are nearing retirement age, they are:
Having $1 million in cash, assets and 401Ks will be enough. In the past, this may have been true, but in 2013, $1 million doesn’t buy what it used to, and saving that much in assets is out of reach for many middle class Americans. Working with a financial advisor and making certain he understands your retirement desires – travel, lifestyle, etc. – will go a long way in help you ensure you have the funds you need when you’re in your Golden Years.
- Healthcare costs may be a big budget item, but it’s not likely that it will be the biggest you will face in retirement. The number one expense most retirees face are taxes. The fact that many individuals will be drawing money from assets they have enjoyed tax deferral status on during their working years, is not one that is always considered when retirement draws near. It’s important to work with your financial advisor to devise a plan to meet the tax responsibilities that arise when you begin drawing on your tax deferred retirement savings.
- Moving to a smaller home will reap large rewards. While in some instances a smaller home may be more beneficial for some individuals, downsizing to save money may not be the end result. In some cases, it may be more cost effective to remodel the existing family home to meet the needs of the aging residents. When you consider the fact that many seniors will have paid off the family home, it may not make sense for them to take on another mortgage payment. For example, closing off the upper floors and moving the living space to a ground floor may make more sense. Age-proofing the home with updated, senior friendly bathroom fixtures and rearranging cupboard space could be more cost effective and allow the senior to age in place in familiar surroundings. Additionally, the investment in a home medical alert system also provides peace of mind to the senior and the family members that if a medical emergency arises, the senior will have immediate access to health care at the push of a button.
- Speaking of homes and mortgages, it may not always make sense to pay off one’s home mortgage early; this hinges on the interest rate on the home as compared to interest rates on other items you’re paying off on a monthly basis. If you have a mortgage that has a low interest rate, and if mortgage interest remains a tax deductible expense, it may make sense to simply pay additional amounts on the monthly mortgage payment rather than cashing in a retirement account to pay it off entirely. Paying off high interest rate car loans or credit card debt is a more fiscally sound approach.
- Don’t rely on Medicare to cover your healthcare expenses. The purpose of Medicare is to provide coverage in the event of a catastrophic illness or injury, not as a way to cover healthcare costs. Medigap and other supplemental coverages are available for individuals in need of healthcare coverage. It is best to check on costs and providers for additional healthcare coverage prior to retirement.
Planning early for retirement is the best course of action, but even those individuals who haven’t taken the time to meet with a financial advisor in the past, can reap the benefits as a way to make living in retirement a more enjoyable venture.
As you age, finding ways to pay for the eventual need for assisted living becomes a more pressing concern. Individuals make plans for their Golden Years and retirement with the assumption that they will remain healthy and be able to age in place. Many people fail to plan for what it would cost if assisted living becomes a necessity for one or both of the partners in the marriage.
The costs for assisted living can very quickly dissolve a savings account and leave you wondering how to pay the expenses and this could potentially fall to the children. Planning for the possibility of assisted living arrangements should be done while making plans for retirement. There are various levels of assisted living facilities and the costs, which include:
- The size of the living space desired
- The level of healthcare needed
- The location of the community
- The amenities provided
In many cases, the costs associated with assisted living are paid for out of pocket or through a combination of Social Security, Veterans benefits or other pension funds as well as savings.
There are ways to plan for the time when you or your relatives may no longer be able to age in place and need more assistance with day to day living.
When making plans for retirement and beyond, here are some things to look into for paying for assisted living:
- Long term care insurance is a private paid insurance option that can pay for assisted living expenses. The earlier these policies are purchased, the less expensive the premiums. The prices and coverages can vary dramatically depending on the company from which it’s purchased. The premium will also be based on the age, health and level of coverage desired. Read the fine print to see what will be covered and what needs to happen to be able to access the coverage.
- Medicaid, a government-run program, may assist with certain bills associated with assisted living as each state determines the way in which Medicaid is implemented. The levels of assistance provided are based on the individual’s net worth and income level. Medicaid is typically provided to individuals who have few economic resources or those who are disabled.
- Medicare is another government program which provides limited assistance to individuals. It typically will pay for care that is deemed medically necessary and may even provide funds to pay for professional caregivers.
- Veterans benefits, designed for qualified veterans and their spouses, can help with qualified assistance living expenses. Call the local Veteran’s affairs office to see whether this tax-free pension benefit can help.
As with any life event it’s best to plan early for care needed as you age. Making decisions while under pressure or in crisis mode makes the decisions more difficult and may leave information on paying for assisted living expenses unexplored.
With over 24 percent of the national health care budget devoted to caregiving and 11 percent of the total costs in health care consumed by caregiving, the industry is booming with no sign of slowing down. Experts are beginning to worry as Medicare is expected to run into deficit in the upcoming years and plans to curb Medicare spending are growing.
The current proposals set forth by lawmakers and members of the bipartisan deficit-reduction panel to reduce Medicare would require beneficiaries to pay a larger share of Medicare and one idea being tossed around would completely transform the program by allotting seniors a set amount of money to buy their own medical coverage.
Add in a growing trend away from unpaid informal caregiving toward paid formal care and the U.S. may find itself on a disaster course. Over the past 50 years the number of informal caregivers has greatly increased while the availability of informal caregivers has decreased.
As the birthrate continues to decrease and the number of Americans over the age of 65 continues to balloon, the problem with available caregivers is a growing concern. The younger population is growing at a decelerated rate while the older population is rapidly expanding. Thus the number of young caregivers is declining in proportion to a burgeoning older population that will require care. Currently there is also a growing trend with more households being headed by single individuals, reducing the number of spouses who would have otherwise been able to provide care.
Since the need for caregiving rises insurmountably with age, the caregiving shortage will continue to plague society. It is estimated that by the year 2050 the elderly group needing care will increase from 4.3 million to 20 million, representing 4 percent of the population, signifying that this group will continue to deplete the number of available caregivers.
As potential informal caregivers continue to relocate further away from family members, those needing care will have to increasingly rely on exhausted government funds which could eventually lead the entire system to failure.