Planning for the realities of ER medical/LTC expenses

[DawgMan]

Trying to get my arms around this whole health care ride from ER to Medicare and beyond. Tell me what I am missing here in properly/reasonably underwriting "enough" in my medical budget from the early years of RE and beyond...

Plan is to RE end of next year at age 55. Both DW and I are "healthy" with no real ongoing expenses other than a couple of minor meds, no medical concerning conditions. Having been self-employed for the last 30 yrs, i am accustomed to taking as much risk as I can with high deductibles with the lowest premium. We switched to a Christian non-insurance plan as of the beginning of the year which saved me significant $$ ($18K just in premiums) and anticipate staying on this plan until further notice. Current drive out budget for premiums and medical costs I have $24K/yr allocated (still 2 kids on my plan). Hopefully both kids will be on their own plan once I launch.

Once I get to Medicare, my experience from over seeing my dad's bills before he passed from cancer was his out of pockets might have been no more than $5K/yr $6K/yr for supplemental insurance, meds, etc. This begs the questions as to how much you really need to plan for once Medicare kicks in??

So this brings me to the LTC question. I get that the cost of LTC can be up there, however, if you were previously planning a RE that had a fair amount of discretionary spending and/or own a home, couldn't you argue if your condition requires LTC, 1) you wont be doing as much/any of the discretionary (i.e. travel) plans you had and those $$ will shift to your new LTC line item, and 2) perhaps you end up selling your house/take a reverse mortgage to cover these costs??

Just spit balling here as this whole health care cost issue seems to be one of the biggest bogies ERs struggle planning for.

For those of you who have driven this path from ER to Medicare to possibly LTC, how did pan out? Were you under/over prepared financially?

 

[Newventurer]

Currently LTC is costing my mom $4500 per month in a very nice facility in the Midwest, with level 2 care. One thing I think you have to consider is is the possibility that the reason you will be seeking LTC is due to stroke, dementia or early Alzheimer’s, you won’t be implementing plan B at that point, someone else will be. If you have a spouse living, won’t they need to live in the family residence?

We purchased LTC insurance for my wife and I chose not to buy it for me. I am playing the odds that it’s her vs me, doesn’t mean I’m right.

Decreased health is a common side effect of aging, and I think we each make a plan that takes into account as many of the risk factors we can reasonably deal with and considering our family health issues and hope for the best. You will likely over save (die early) or under save and go on Medicaid, unless you are really nice to one of those daughters and they take care of you.

I haven’t seen one perfect answer to your questions but maybe you can piece together a plan from what others have done.

 

[joeea]

So this brings me to the LTC question. I get that the cost of LTC can be up there, however, if you were previously planning a RE that had a fair amount of discretionary spending and/or own a home, couldn't you argue if your condition requires LTC, 1) you wont be doing as much/any of the discretionary (i.e. travel) plans you had and those $$ will shift to your new LTC line item, and 2) perhaps you end up selling your house/take a reverse mortgage to cover these costs??

Perhaps.

You could take the same approach to pretty much any insurance. You could take your chances, hope for the best, and change your plans if the best doesn't happen.

Or you could purchase insurance and transfer the risk (at a cost).

 

[97guns]

My dad spent his last few months in a care home in CA, it was $5500/mo and that was one of the cheapest places we found, they ran up to $9/$10,000 a month, he had a very modest income of no more than $3k a month through SS and dividends but he lived frugally and was house rich. They key to him not chewing through all his assets was prolonging the care Home for as long as he could, I cared for him until I couldn’t any longer, he only spent 4 or 4 months there, he didn’t want to go at all but I made the final decision for his well being.

My mom had s friend who’s mother had dimentia, she put her in a home and she survived 9 years chewing through her own assets and forcing the daughter to mortgage her own home which she ended up losing to the bank

 

[athena53]

So this brings me to the LTC question. I get that the cost of LTC can be up there, however, if you were previously planning a RE that had a fair amount of discretionary spending and/or own a home, couldn't you argue if your condition requires LTC, 1) you won't be doing as much/any of the discretionary (i.e. travel) plans you had and those $$ will shift to your new LTC line item, and 2) perhaps you end up selling your house/take a reverse mortgage to cover these costs?

I'm widowed and I agree with you on the LTC- but having a spouse in the picture changes it all (and is one reason I'm unlikely to remarry). As newventurer pointed out, if one spouse is still in the house you still have home and car expenses as well as LTC. Reverse mortgages scare the crap outta me.

I'm just in my first year of Medicare and my experience with my late husband was that out-of-pocket expenses were pretty reasonable and in the range you mentioned even with his final illness. Prescriptions are still a gamble; you can be unlucky enough to get a few that have big copays because they're the latest and most expensive. Don't forget hearing aids, dental and vision. Medicare doesn't cover them. Good hearing aids and dental implants are not cheap but can greatly improve your quality of life.

 

[imoldernu]

Very confusing...
Before medicare kicks in, is the riskiest and most expensive time, I think.

Overall, long term care is the biggest risk. Full care can be as much as $80K+/yr.

Know the limits of supplemental policies.

Am against LTC insurance even though we've had it for 25+years for DW and I.. Paid in about $50K so far, for max $100/day for 3 years. Current price is much much more.

Be sure pre-medicare coverage is not limited to a current address. We got caught with an Illinois policy that didn't cover our snowbird 6 and 6 in FL... legal tangle when DW had a very expensive stroke operation. Long hard legal tangle. Medicare supplements CAN stay with original provider. Ours is still BC/BS in FL though we live in IL.

Understand 5 year lookback for catastrophic illness. Don't sell home or do a reverse mortgage, but legally keep home even if expenses exceed other assets.

Consider legal advice to avoid joint ownership of assets...

Not worth it for worry about healthcare costs, to become an obsession, but a look at recommended healthcare websites may not be a bad idea.
One from Forbes:
https://forbes.com/sites/vanguard/2017/07/05/what-you-need-to-know-about-healthcare-costs-in-retirement/#4dc45c1341f6

Can't cover every possibility, but getting the basics down should be worth the time spent. Good Luck!

 

[GTFan]

OP you're already rolling the dice bigtime with healthshare, why bother with LTC? You're already betting that nothing big will happen before Medicare...

 

[Dtail]

My dad spent his last few months in a care home in CA, it was $5500/mo and that was one of the cheapest places we found, they ran up to $9/$10,000 a month, he had a very modest income of no more than $3k a month through SS and dividends but he lived frugally and was house rich. They key to him not chewing through all his assets was prolonging the care Home for as long as he could, I cared for him until I couldn’t any longer, he only spent 4 or 4 months there, he didn’t want to go at all but I made the final decision for his well being.

My mom had s friend who’s mother had dimentia, she put her in a home and she survived 9 years chewing through her own assets and forcing the daughter to mortgage her own home which she ended up losing to the bank

And that is why some folks get an irrevocable trust to protect their assets.

 

[DawgMan]

OP you're already rolling the dice bigtime with healthshare, why bother with LTC? You're already betting that nothing big will happen before Medicare...

Depends on what you call rolling the dice. I did a significant amount of research looking at best/likely/worst cases in different "what if" scenarios comparing them to my options (Obamacare) and made a risk/reward business/health decision. While new to the healthshare program, I have had 1 claim for a knee injury that ran few thousand $$ and it was 100% covered, service/response, and resources were outstanding. I choose the healthcare provider/facility I want and it's covered. Weird concept I know... I am in charge of my own healthcare, go figure. Contrast that with my personal experience, particularly over the last 5 yrs with both my health insurance options/cost/service and managing my dad's healthcare with his cancer until he passed, and the decision for me became crystal clear. Everyone's situation is different and healthshare is not for everyone, but so far for me, it has been the right business/health decision. I save $18K/yr alone in premiums to help buffer some potential unrecoverables, but so far 100% has been covered.

See you on the field in November Jacket!

 

[GTFan]

You save on premiums sure, but what if they can't/won't pay for something big like cancer? You have no recourse - that's the problem and the risk that everyone in healthshare is taking. It's basically the Wild West of coverage.

That's why I said no need to bother with LTC, you're already gambling.

 

[Katsmeow]

I would never ever do the healthshare thing. When DH retired we stayed on his employer's retiree plan. He soon went onto medicare but I was only 54 when he retired (and I semi-retired and went very part-time with my employer so my only insurance was through his retiree plan). Although partially subsidized by his employer, it has been quite expensive. But I have felt better knowing I have good coverage. Next year I go on Medicare.

As for LTC - we ended up not doing it. In theory I think that LTC policies should be gotten. But, in reality, the existing products all seemed very flawed and didn't provide enough protection. There are a number of threads here that talk about these issues. I can't criticize people who decide to get LTC policies. But, for us, I just couldn't see it being worthwhile given the flaws of the current policies.

 

[Teacher Terry]

97, the daughter should have never spent her own money on her mom’s care. Once broke Medicaid kicks in. I have been through this. The key is to choose a home where once your assets are gone they will not throw you out but take Medicaid.

 

[deserat]

I am dealing with this as my mother has terminal cancer - she finally had to be put into an assisted living home - it's a house in a regular neighborhood. She is essentially 'renting' a room which comes with care. Hospice visits as much as needed and she is supervised. I don't think she will live much longer, but I feel this has been the best solution to a frankly very difficult situation. I am paying for everything due to family issues, however, luckily, I can afford it right now and it won't be a long term situation like that of Alzheimers.

My cost is $3500/mo and that is in the middle. The inpatient hospice facility quoted me $200/day, so ~$6,000/mo (AZ). I spoke with my stepmother and her sister's SO is in a skilled nursing facility and he pays $11K/mo (FL).

I am now single and am looking at self-insuring for any LTC issues.