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How much health care money needs to be budgeted?
Old 02-15-2013, 08:35 PM   #1
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How much health care money needs to be budgeted?

I have never been sick, hospitalized, never had surgery and am not taking any medication, so thus far in my life, I have been paying health insurance premium without ever been involved in filing any claim.

I know at some point in my life, I will properly need health care. I read here in budgeting thread about health care cost people need to save for while in retirement.

So what do MediCare A and B actually cover once you are old enough to get coverage? And what proportion of hospital bill and doctor fees do the basic coverage of A and B pay for? What is the maximum out of pocket expense a covered person is liable for each year? Or is it unlimited? What is the purpose of getting Medigap? What is the extra pot of money people talked about saving for, is to be used on? I tried to research those subjects and cannot get any clear answer.

I know long term care is not covered, and to get medication covered you have to buy Plan D.
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Old 02-15-2013, 08:40 PM   #2
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Try looking on Medicare.gov: the official U.S. government site for Medicare
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Old 02-15-2013, 08:41 PM   #3
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I did, and end up still confused on the questions I posted above.
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Old 02-15-2013, 09:02 PM   #4
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I found this article that provided some of answers to my questions.

Everything You Wanted to Know About Medicare But Were Too Confused to Ask — The American Magazine

And this
For Hospital cost, You pay:
  • Days 1–60: $1,184 deductible for each benefit period in 2013.
  • Days 61–90: $296 coinsurance per day of each benefit period in 2013.
  • Days 91 and beyond: $592 coinsurance per each "lifetime reserve day" after day 90 for each benefit period (up to 60 days over your lifetime) in 2013.
  • Beyond lifetime reserve days: all costs.
Wow, the bill can add up fast. No wonder people like Nun and Alan are looking to go back to UK or other home countries where medical care is cheaper.
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Old 02-15-2013, 09:40 PM   #5
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Wow, the bill can add up fast. No wonder people like Nun and Alan are looking to go back to UK or other home countries where medical care is cheaper.

I think most people plan to have another health policy to fill the gaps when they start Medicare. Since I turn 65 in June, I have been absolutely flooded with junk mail, phone calls, and e-mail, all trying to sell me such policies. They are less expensive than they would be without Medicare, I believe.

My own federal retiree health insurance is supposed to fill the gaps nicely, or so I hear. I'll be able to provide a first person frontline report on that after my Medicare coverage starts.
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Old 02-15-2013, 09:52 PM   #6
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Not everyone is lucky enough to have the health insurance policy that covers you in retirement.
I wonder how true this kind of article is. They are written during the time when ObamaCare is being introduced,

Medical bills prompt more than 60 percent of U.S. bankruptcies - CNN


"Unless you're a Warren Buffett or Bill Gates, you're one illness away from financial ruin in this country," says lead author Steffie Woolhandler, M.D., of the Harvard Medical School, in Cambridge, Mass. "If an illness is long enough and expensive enough, private insurance offers very little protection against medical bankruptcy, and that's the major finding in our study.""
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Old 02-15-2013, 10:01 PM   #7
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Bondi, that article is probably right but it doesn't say anything about Medicare.

As I mentioned there are a BAZILLION policies to supplement Medicare that are available privately and every one of them will send a big junk mail packet to your mailbox once you hit 64.5. They don't cost anywhere near as much as a "normal" private health care policy, because all they do is supplement Medicare.

Anyway, you might be in luck.

The hardest period of time to get through financially, is from early retirement to age 65, in my opinion. I worked several years past FI waiting to qualify for health insurance, and would not have been able to retire without it.
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Old 02-15-2013, 10:01 PM   #8
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I think most people plan to have another health policy to fill the gaps when they start Medicare. Since I turn 65 in June, I have been absolutely flooded with junk mail, phone calls, and e-mail, all trying to sell me such policies. They are less expensive than they would be without Medicare, I believe.

My own federal retiree health insurance is supposed to fill the gaps nicely, or so I hear. I'll be able to provide a first person frontline report on that after my Medicare coverage starts.
+1 about a gap policy. The most comprehensive of the Medicare Supplement plans is Plan F which I believe picks up everything regular Medicare does not cover.

Here's a link from Medicare.gov outlining in chart format the various plans:

Compare Medigap policies | Medicare.gov
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Old 02-15-2013, 10:22 PM   #9
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W2R and easysurfer

I am not at the age when I will be getting MedicCare. I recognize now, after being lucky enough to be healthy and have no medical expenses this far, I better set aside a reserve pot of money for health care cost when health starts to go. I also really need to study those supplemental or gap policies when the Medicare age approaches.

Maybe someone like Alan or Nun can enlighten me about lifetime coverage limits such as in the UK .

Does the Health Care Reform passed now in the US makes a difference for Americans in affordability of health care cost for those in retirement and will be major consumers of health care, or it is just a policy to make sure everyone in the country can get and has health insurance coverage ?
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Old 02-15-2013, 10:29 PM   #10
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I have to wonder about these supplemental plans. Insurance companies wouldn't sell individual health insurance to anyone that age but they sell these supplemental plans. So they must be a good deal for the insurance company.
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Old 02-16-2013, 06:16 AM   #11
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Does the Health Care Reform passed now in the US makes a difference for Americans in affordability of health care cost for those in retirement and will be major consumers of health care, or it is just a policy to make sure everyone in the country can get and has health insurance coverage ?
Bondi688, the Kaiser Foundation has a website that explains the PPACA, here
Here is a PDF summary of the major changes, including those that affect Medicare http://www.kff.org/healthreform/upload/8061.pdf

The PPACA does not lower the total cost of health care in the US. It does enable many more people to get health care coverage. It also introduces a series of changes that could lead to lower costs over time.
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Old 02-16-2013, 06:33 AM   #12
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My 94 yo great aunt is on Medicare and I take care of her finances. She has a Medigap policy that costs her ~$200 a month and covers all her Medicare deductibles (so far anyway).
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Old 02-16-2013, 09:29 AM   #13
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Originally Posted by bondi688
W2R
Not everyone is lucky enough to have the health insurance policy that covers you in retirement.
I wonder how true this kind of article is. They are written during the time when ObamaCare is being introduced,

Medical bills prompt more than 60 percent of U.S. bankruptcies - CNN

"Unless you're a Warren Buffett or Bill Gates, you're one illness away from financial ruin in this country," says lead author Steffie Woolhandler, M.D., of the Harvard Medical School, in Cambridge, Mass. "If an illness is long enough and expensive enough, private insurance offers very little protection against medical bankruptcy, and that's the major finding in our study.""
I didn't sense this article to relate to retirees. I would imagine that most long term illnesses that cause bankruptcy are from loss of job and income, as most working people live paycheck to paycheck. A gold plated, zero deductible health insurance would not prevent many of these bankruptcies if no income was coming in from their job.
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Old 02-18-2013, 05:34 PM   #14
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As I am currently working out our own healthcare budget, I will reveal what I have found and have planned. Hopefully it will help others as so many have helped me on this board.

Quick background- DH recently left mega corp to semi - retire . We are Ages 56 and almost 55. DH has no health issues , While I am very healthy I do take several medications - all to address thyroid and menopausal deficits. These help keep all those other numbers (cholesterol & weight ) where they belong.

Megacorp early retiree coverage was offered at just shy of $2000/month . Low deductibles but high premiums. No dental or vision is included. Perhaps a deal for the otherwise uninsurable but not for us .

Cobra was comparatively not bad at about $750/month to continue our HSA eligible plan with a $3000 pp deductible & 5K out of pocket max . Dental is an extra $86/month .

What we have picked was in the private market for $506/month - with the same company as we have had so we can keep our Doctors. We like them and they took a long time to find. This coverage is also HSA eligible has a $10,000 deductible and a 25% co-pay up to the $11,200 OOP max. we have never hit the $3000 deductible and obviously hope not to . Note to those who might wonder - I am being charged a 10% ($23/month ) "medical rate up " because of my medications - which total less than $100/ month - and I pay for as long as we do not hit the deductible.

The decision to forgo cobra coverage (besides not intending to hit the deductible) was the thought that we might be better off getting into a plan before the PPACA kicks in next year . I thought it just might give us more options this year and get us in a group that needed to under go underwriting- perhaps mitigating cost increases going forward to some degree. (hey I can hope ) If wrong we can change later.

Looking at dental we will pay the cobra dental insurance for the 18 months . As a self employed person it will be an above the line deduction and almost a wash with what our local Dentist charges for bi-annual cleaning and check ups. It is really good coverage. After talking to others and doing research online I doubt we will carry coverage after that . The consensus seems to be that if you have a healthy buffer and no big dental issues it can be hard to justify.

Vision - we have found sale offers often match or exceed the insurance we have had so not planning on coverage there . (We both wear bifocals - well normally I wear contacts. )

The budget for our out-of-pocket costs are a little more philosophical. I know what our normal costs are ($1000-$2000) and have budged on the high side there. Then I have what I call the "buffer " category in our budget. That is about the size the $11,200 max .

That buffer is set aside mentally each year and if not spent we get to spend it on travel the next year. (A reward for all that healthy eating and exercise ? ) This means our travel budget will vary yearly from what we spend now ($10-$20K ) to a bonus equal to the buffer . I am reasoning that if we are maxing out the medical costs we are probably not up to a lot of travel anyhow .

FWIW those are my thoughts .....
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