If you are in your fifties or sixties you need to plan for three distinct phases of Health Care needs:
1. Health Care Before 65
2. Health Care After 65
3. Long Term Care
Health Care Before 65
If you are younger than 65 and have been laid off, disabled or are otherwise not covered with an employer health plan you need to fashion a ‘bridge’ to age 65 when Medicare coverage begins.
The age of 63 ½ is the magic age to be laid off from an employer with a health plan since you will automatically qualify for 18 months of COBRA coverage which will take you to age 65. The coverage will be expensive but it is an option.
The Affordable Care Act has significantly changed the pre-65 health care discussion in a number of ways. Very importantly, pre-existing conditions will no longer prevent one from getting coverage. No matter what your health history you will be able to find coverage. Comparison shopping through health care exchanges is improving and will simplify the process. Lastly, tax credits and subsidies are available for health care coverage if your income is very low.
For more good summary of Health Care insurance options before 65 read the link to the right.
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Health Care After 65
One of the most respected reports on the actual financial behavior of Americans is the Consumer Expenditure Survey compiled by the Bureau of Labor Statistics. The survey reports that, after housing, one of the largest reported expenses for people over the age of 65, is for medical care.
At age 65 anyone who has paid Medicare payroll taxes for at least 10 years, or has a spouse who has done so, becomes eligible to Medicare coverage. (Medicare Handbook)
What many people do not realize is that, even with Medicare coverage, they will still be responsible for a significant portion of their own healthcare costs. Medicare has deductibles, copays, and monthly payments. Medicare does not cover dental care and there may be significant out of pocket expenses for drug coverage even with Medicare D for drug coverage.
There are various projections of health care costs after 65 (read article for more details). This may sound high, but without evaluating your specific situation, plan for annual expenses of $4000- $5000 per person as a rough rule of thumb. A more accurate estimate of your particular health care costs will depend on your HealthCare and Wellness Mindset.
HealthCare and Wellness Mindset
Attitudes and lifestyle choices can effect health care costs, possibly lowering costs in earlier years for healthy lifestyles or maybe raising other costs in later life. Here are some mindsets to consider that may affect your healthcare costs.
Are you a Maximizer or a Minimizer?
A Health Care Maximizer is a person who immediately goes to the doctor for any health issue. They prefer to get any and all tests as long as there is even a small chance it will provide useful diagnostic information.
A Health Care Minimizer is a person who prefers to avoid doctors as much as possible and is not inclined to chose the more exotic and expensive tests and surgeries if they are not obviously called for.
Holistic and Alternative Care Users – Although it is becoming more common for chiropractic or acupuncture to be covered by insurance plans if you use Chinese Medical doctors, various types of bodywork, herbal treatments, hypnosis, or other less common modalities you may need to adjust your out of pocket expense planning accordingly.
Your genes are your genes and have a major influence of the long term outlook for your health. The more that you know about the health history of your siblings, parents and grandparents the better.
Lifestyle and Wellness
This is a huge variable in health and health care expenses and the variable about which you have the most control. Consider these core questions:
- Are you physically active?
- Do you regularly engage in challenging mentally active?
- Do you have a healthy diet?
- Do you maintain an appropriate body weight?
- Do you have a vital social life?
The more of these questions to which you answer ‘yes’, the more likely you are to have better health, problems of a less chronic nature, and incur lower costs for drugs, copays and the like.
Other core recommendations are to avoiding smoking and to pay attention to your stress level , taking steps to manage it if it becomes a problem.
Read about the famous Bluezones’ study which identifies areas of the world where people live longest, are healthiest and happiest. Find out about the key attributes that all of these communities have in common and strategies to work these attributes into your own life.
Long Term Care Planning