08172017Headline:

Reasons why Medicare patients need to save money for medical expenses

While government continues to debate how best to reign in Medicare costs, Medicare recipients should consider how to cover their future medical expenses.  Even if the government makes no changes to Medicare the beneficiaries still pay out-of-pocket for some medical expense.  Further more  the cost of care is still rising.

Health care spending in the United States  HAS reached $ 2.6 trillion in 2010, according to the Centers for Medicare and Medicaid Services.

Although many looking to retire also look forward to having a break from health care costs with Medicare they are not totally off the hook.  About 13% of health care costs are out-of-pocket expenses with Medicare, additionally there is the cost of supplemental insurance and long-term care.

Medicare only covers 60% of the costs of health care services for beneficiaries 65 and older.

In the year 2012 a 65 year man would need $ 70,000 in savings while a woman would need $ 93,000 in savings to have a fair chance of cover healthcare expenses, this however does not include long-term care.   According to a 2011 Employee Benefit Research Institute study a 65-year-old couple with average prescription drug expenses would need $ 287,000 to have a 90% chance of covering all medical costs after retirement (excluding long-term care).

It would take 25 years of saving $ 5,000 a year in an HSA with a 5% rate of return to have $ 250,000 for medical expenses (tax-free, grow tax-free and come out tax-free 

The Affordable Care Act does however try to reduce costs for those Medicare recipients with the highest prescription drugs costs by the year 2020.  This Act intends to reduce costs by sharing the costs (coinsurance) of Part D (donut hole) and thus reduce the amount of health care savings required in retirement.

Capital Hill gave us one more reason to save for retirement health care cost, Long term-care.  During the recent “fiscal cliff”  debate one of the little known facts of the deal was the elimination of the CLASS Act.   The CLASS Act was part of the original 2010 Affordable Care Act to provide lower income people with long-term-care insurance at low costs.  The American Association for Long-Term Care Insurance estimates that a healthy 60-year-old couple should plan on paying an average of $ 3,335 per year for long-term care.

It’s never to late start saving for retirement health care costs.  Check out how www.familyhealthportfolio.com can help you and your family start saving now.

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