Retiree Healthcare for Parents: A Lot Isn’t Covered | Series 3.7

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Welcome to the EnjoyMore30s Family Finance

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podcast. The only podcast dedicated to making life more

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enjoyable for young families. By hitting on the financial topics

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that tend to weigh on us, stress us out, and distract our focus

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from simply enjoying life.

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Hello, and welcome to the seventh and final episode

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of the Your Parent's Money Mindset series. Last episode, we

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covered the new restrictions inherited IRAs face when it

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comes to the distribution timeline, the potentially huge

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negative tax impact, and what you can possibly do to minimize

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it.

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Today's episode is titled Retiree Healthcare for Parents,

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A Lot Isn't Covered, where we're going to review some of the main

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items you really should be aware of when it comes to your parents

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and the possible medical expenses they are exposed to.

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You will learn today what you need to know about these main

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retiree medical items and what you can do and help your parents

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to be aware of to try and best account for them. If there is a

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primary episode to listen to in this series, this is the one.

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Now as you probably know, having a baby is expensive. The

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expenses start right away way before you even welcome them

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into the world. When I had my first child Avery, I was like,

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you know, I have health insurance so I'm probably

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covered, right? Well, as you may have found out like I did, that

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is not always the case. Some recommended tests now mind you,

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these were doctor recommended tests to make sure our unborn

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child was healthy, for us weren't covered. So we had to

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pay out of pocket for those. Others we had to submit back to

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insurance for consideration. The hospital charges 10s of 1000s,

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of which a few 1000 winds up coming back to you. Who would

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have thought that there were so many tolls on the road along the

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way to having a child? So what you need to know is your parents

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and their medical expenses can be much like this as they age.

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I'm guessing you have heard of the terms Medicare and Medicaid

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before. So that's kind of where I want to start.

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Now Medicare is the federally run universal retiree healthcare

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available at age 65. So it becomes your primary insurance.

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Medicaid, on the other hand is a program run at the state level

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and provide certain medical coverages for those that meet

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extremely stringent lower income levels. So unless you really

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make almost nothing, this tends not to be applicable for bass

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medical coverage and speaking about Medicaid. Instead, let's

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transition back to the more widely applicable Medicare. Now,

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Now some of the main items not covered at all though through

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we could spend easily an hour covering everything here. So I'm

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going to really just focus on the parts that are likely most

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pertinent for you to know about, the parts where the holes

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generally occur. These two areas can be broken down into what

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Medicare doesn't cover all of and what it doesn't cover any

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of. Medicare has different parts, the main two parts being

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Part A for hospital insurance, and Part B for medical

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insurance. This base coverage, though, doesn't cover all of the

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costs. Roughly 80% is covered after the initial deductible,

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leaving around 20% left which can certainly add up very

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quickly for larger medical items. The two ways to fill this

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hole are Medigap often referred to as a Medicare supplement plan

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Medicare are long term care and most dental and vision care. The

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or a Medicare Advantage plan. Again, I could spend easily

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hours diving into this, but the main takeaway is that they

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should really make sure they have something. In very general

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terms Medigap plans are a standardized add-on to your

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original Medicare to help cover that remainder or gap, hence,

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Medigap. The biggest benefit here is you generally have more

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flexibility in what doctors you use and where you receive care

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and even though the plans are provided through insurance

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carriers, what they must include is standardized. So every Plan G

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first one though Long Term Care is the biggie. For those that

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is the same as every other Plan G. Most of our clients tend to

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have these Medigap plans because of these reasons. So that's them

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filling in that last 20% that Medicare is not covering.

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Medicare Advantage actually replaces your original Medicare,

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and it can sometimes be more cost effective, but it does

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generally come with more restrictions on where you can

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receive care and the plans are not standardized. So you really

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need to make sure you carefully review what you're actually

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signing up for. It does generally include prescription

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coverage, though, which is a benefit, whereas in a Medigap

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Plan, you would need to also purchase Part D for

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prescriptions, although that Part D tends not to be overly

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expensive.

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are not familiar, long term care can be amazingly expensive and

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amazing in a bad way. In New Jersey, you can easily hit six

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figures a year for the highest levels of care. I've seen places

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in Arizona be less than $40,000 for similar care so it really is

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dependent on where you live, but as you can see, none of it is

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cheap. Most people kind of just assume that Medicare is, you

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know, going to cover it. "I've heard of Medicare, I know that

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everybody has it, it kind of covers my health related stuff.

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So long term care is probably lumped in there, right?" But it

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does not cover you in the way that you think Medicare is going

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to cover them as they get sick. But let me say, again, long term

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care services are not covered. So what can you do? The first

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thing is to make sure that your pre retiring parents know what

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they're going to use to bridge the gap. If your parents happen

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to have medical retirement benefits through their work,

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which is something you really don't see too much going forward

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anymore, this will act as their supplemental. So they're

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generally already covered. Getting help from a qualified

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individual for those that do not have the retirement medical

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benefits through work, can be very important in helping to

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make sure the right decision is made. If you do get help from a

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qualified individual, just make sure to ask them, do they only

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do Medicare? Do they do a lot of other things as well, just as so

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you're aware kind of where they are coming from. Is Medicare

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really the only thing that they do or is it just one of many

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things that they may want to now discuss with you. The biggest

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part of all of this though, may be what they do right after

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retirement. They have 63 days, once they lose their existing

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health coverage through work to obtain a supplement policy and

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receive guaranteed issue or acceptance. So 63 days, no

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matter what the pre existing conditions, they have to be

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accepted. That's why this initial window after they retire

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is so important. It's huge, do not miss it. If you miss it,

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then you will have to qualify for the coverage. So this is a

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huge point for those parents that may not be in the best of

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health.

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Lastly, what you can do when it comes to long term care is have

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a plan. At least then you'll know where you stand. Medicaid

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in relation to long term care only kicks in when you have

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spent down virtually all of your assets. So that is not something

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to really rely on, especially if you're in a marriage situation

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where the healthy spouse still needs resources of their own to

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survive. Home equity can be in an emergency kind of a backup

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plan you know, otherwise, there are certain products available

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through life insurance, annuities, and standalone

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insurance products that can help bear at least some of that

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expense. Here though, is really where you're going to probably

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need an advisor or at least some financial planning, as it

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usually needs to be involving excess resources, not those

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resources that they're really depending on to provide

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retirement income already. If they have certain annuities or

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IRAs that are providing them with the income that they need

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in retirement, you can't use those as a long term care plan

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necessarily, because they're kind of already spoken for,

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especially again in that married situation. The key though, is to

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have some kind of a plan, God forbid Long Term Care does

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arise, what will you do?

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So the recap for today is to realize your parents may not be

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fully aware of what coverage they have medically in

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retirement, and could possibly be assuming, you know, they're

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more fully covered than they actually are. So it's really

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important to talk to them about what they may have, citing that

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there are certain things that are only, you know, partially

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covered by Medicare, and others just flat out not covered at

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all. Remember that guaranteed issue or acceptance period right

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after losing their existing medical coverage for obtaining

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that supplemental is really, really important. And even if a

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rough plan of what would happen our long term care situation is

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really highly recommended whether it's we're going to go

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to our home equity, we have this account over here that we're not

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touching intentionally or you know, maybe you're lucky enough

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to have actually had the insurance or gotten the

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insurance you know back in the day so see what kind of

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situation that they're in.

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As always, thanks for tuning in today. If you are able to

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implement what we cover then that is always just fantastic.

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You have less to worry about then before you can focus more

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on enjoying life. If you are wanting help with these things

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though or have any questions that you need help in

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clarifying, as always check out the Ask Joe section on the

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show's website www.enjoymore30s.com. That's

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enjoy more three zero s.com. If you enjoyed this episode, please

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make sure to subscribe, review us on Apple podcasts or wherever

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you listen. There are literally millions of young families out

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there I'm trying to reach and help just like you.

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Overall in the series, I really, really hope that you were able

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to pull some great pieces of information out of it and help

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bridge that financial mindset gap that almost certainly exists

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between you and your parents to some degree. I can't recommend

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enough to not just take the easy route and avoid all these

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financial conversations. Because really, the truth is, every one

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of us will pass away at some point so it's either having some

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of these conversations now, when there is still time for

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adjustment improvement understanding, or you know, you

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could do the alternative and just wait until the end and hope

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it all just works out. We've seen just too many households

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where these easily avoidable problems are run into and

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experienced just completely unnecessarily.

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The next episode will be the recap of the Your Parent's Money

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Mindset series, helping you to take that breather, mentally

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organized some of these main concepts that most speak to you

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or you think are the most relevant for your parents, and

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take even one step forward. These things are not only going

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to make your life more enjoyable by avoiding the complications

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potentially as they age, but really also make their lives

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easier by avoiding the stresses that result from these same

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complications. So until next week, thanks for joining me

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today, and I very much look forward to connecting with you

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again soon.

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The conversations on this show are

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Joe's opinions and provided for eneral information purposes

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nly. They do not constitute ccounting, legal tax or other

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rofessional advice for your pecific situation. You should

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lways seek appropriate advice rom a financial advisor,

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ccountant, lawyer or other rofessional before acting upon

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ny content or information found ere first. Joe is affiliated

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ith New Horizons Wealth anagement LLC, a branch office

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f TFS Securities, Inc., and TF Advisory Services an SE

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registered investment adviso member FINRA/SIPC