How do you plan for change in Medicare?

[lark_L]

Ok, I know this is WAY early and we don't know what will happen. But, I'm under 55 and one plan being kicked around would give me some amount of cash so I could "buy" my own health insurance instead of getting Medicare. So, now I'm thinking - gee how much money do I need to put into my retirement planning spreadsheet to cover the difference every year.

I certainly understand and applaud the efforts to reduce the deficit. And I'm willing to do my part. Of course, it's a lot easier if it doesn't affect me personally .

 

[Forrest]

I think this blog post sums up my view
http://www.bankrate.com/financing/retirement/politics-vs-retirement/
"I don't want to be left out, so here's my 2 cents: Boomers -- those are the people born between 1946 and 1964 -- are about 75 million strong. Unlike other segments of the population, they vote. That gives this proposal a snowball's chance on a July day in South Florida of passage."

Read more: Politics vs. retirement | Bankrate.com Politics vs. retirement | Bankrate.com
​

 

[Independent]

When I retired, I thought of the story about zebras and lions. To survive, a zebra doesn't have to be faster than the fastest lion. It's good enough to be faster than the slowest zebra.

So my thought was that the voters aren't going to let massive numbers of old folk die for the lack of normal medical care. I needed to have more money than the average retiree, so whatever the gov't does for the average will be good enough for me.

Of course, it's possible that I don't want to have a lot more than the average retiree because I don't want to lose too much to some future means test. But I assumed I could always find a way to spend that "extra" money if I saw that coming. I ended up retiring a little early (at 59) when we could comfortably spend more in retirement than we had while working, but not so much more that we'd end up wasting a lot.

In numbers, I thought that current Medicare enrollees spend about $5,000 per person per year on premiums and out of pocket expenses. If we planned for twice that we'd be okay.

 

[chinaco]

It really depends on the changes that will be made.

Plan for your personal worst case scenario.

For majority of people that is the republican plan.

If you are rich... it is the dem plan... consider the higher taxes.


Either way... if you are middle class, the cost will go up one way or the other.

 

[MichaelB]

Medicare or not, you should plan to pay for your own unsubsidized health care.

 

[Gone4Good]

Medicare or not, you should plan to pay for your own unsubsidized health care.

Which works out to be $11,743 per Medicare recipient annually, on average, according to the 2010 Medicare Trustee Report.

 

[MichaelB]

Which works out to be about $10,400 per Medicare recipient annually, on average.

That sounds about right - as in the average unsubsidized yearly premium for a 65 year old.

 

[haha]

Medicare or not, you should plan to pay for your own unsubsidized health care.

Impossible in America, without great wealth.

Ha

 

[Independent]

Medicare or not, you should plan to pay for your own unsubsidized health care.

Which works out to be $11,743 per Medicare recipient annually, on average, according to the 2010 Medicare Trustee Report.

If I understand MichaelB's post, his numbe would be G4G's $11,743 plus the deductibles and copays that Medicare doesn't cover.

I'm not so cautious as to plan for the full amount. I figure the taxpayers will pick up some of my expense.

 

[M Paquette]

Which works out to be $11,743 per Medicare recipient annually, on average, according to the 2010 Medicare Trustee Report.

There's been a year and a half of medical inflation since then, and that's the group rate Medicare gets. Worst case is individual insurance, perhaps with the Ryan Plan subsidy as a 'worst case' Medicare defined contribution. In our region, a high deductible non-Medicare individual HMO plan for persons 65 and older runs $1054-1220 per month (Jan-June 2011 rates) with a $5000 deductible. It is HSA eligible so there's a place to put all that income from greeting folks at WalMart.

Figure $5000 deductible, plus $14,000/year inflated over the period til retirement at the medical inflation rate. I use 7.5% annually, which over 10 years puts the annual cost up to $29K/year. From that, subtract the basic Medicare A allocation of $4,800/year adjusted by GDP growth + 1% annually (call it 4%), which would be $7,100/year, as a possible level of Medicare subsidy for individual insurance.

That gives you a worst case target of $21,900/year + $5000/year deductible, or $26,900/year in personal obligation anticipated for a person currently age 55. A lot can happen in 10 years, and Medicare reforms may not shift quite as much cost onto individuals as the current 'worst case' (in terms of increased Medicare recipient financial burden; I realize some view this as a best case) proposal.

 

[Gone4Good]

Impossible in America, without great wealth.

Ha

Everyone else should have worked harder.

 

[MichaelB]

Impossible in America, without great wealth.

Ha

The cost is already there, and it is being paid by someone. When I think about scenarios, I assume our eligibility for Medicare will be at full rates with no subsidy, even though that option does not exist today. Anything additional to that (such as subsidy for others) will be paid through taxes.

We are all paying these rates today. The biggest subsidy is not in medicare, it is in untaxed healthcare benefit.

 

[haha]

The biggest problem with our medical delivery system is not distributing the astronomical costs, it is that no politicain has the balls to chop some of those costs. And not just by denying care. The rest of the develpoed world manages this just fine, why not the land of the free and the home of the brave?

Ha

 

[FIREd]

Without Medicare, what would a 70 year old at the onset of alzheimer pay for health insurance on the private market? As Ha said, unless one has great wealth, the cost would be prohibitive.

 

[FIRE'd@51]

I find it interesting that so many Obamacare supporters are up in arms about the Ryan-Rivlin proposal, which assumes that those on Medicare would take the "cash" and buy guaranteed-issue insurance from an exchange. Yet, this is precisely how Obamacare will work starting in 2014.

Additionally, it is also interesting that so many Obamacare opponents are in favor of converting Medicare to a subsidized exchange-based system.

We are headed toward "Obamacare for all".

 

[travelover]

........ The rest of the develpoed world manages this just fine, why not the land of the free and the home of the brave?

Ha

I'm surprised that this subject has never been discussed here.

 

[lark_L]

Thanks for the responses. Gives me a lot to think about. With early onset alzheimer's common in my family and my wife's recent bout with cancer, it's pretty scary out there. Of course, I can always work a few more years and bank some more $$.

I was already planning on $1000/mo, as that's almost what my retiree medical costs. I didn't have this dropping off the plan. So, I may bump this up a bit. Thanks.

 

[chinaco]

Medicare or not, you should plan to pay for your own unsubsidized health care.

Ok... put back your $2mm health care reserve (i.e., some huge amount) so you can be self insured.

Without medicare... insurance companies would not insure you... because the older you get the higher risk of needing care (cost burden). You would have no access to the insurance pool.

If you got insurance at an older and got sick.. they would probably cancel your policy (not renew it)... you might get into a state high risk pool after a waiting period.

The problem: The American Private Insurance model (as it currently works) does not work for many people. No company has to insure you.

 

[Gone4Good]

I find it interesting that so many Obamacare supporters are up in arms about the Ryan-Rivlin proposal

I agree. If Ryan and the Republicans are now in favor of guaranteed issue health insurance, with all that entails (proscribed coverage minimums, subsidies, and an individual mandate) then they should be willing to accept the framework for 'Obamacare' and work to improve it - rather than working to repeal and defund it.