Medicare helps more than 55 million Americans with their
health care expenses, with most people age 65 or older qualifying
for coverage. With benefits for everything from hospital stays to
doctors' visits, Medicare is an essential part of retirement
financial planning for older Americans in dealing with one of the
largest expenses they bear. Yet there's a huge gap in Medicare
coverage that doesn't provide financial assistance for services
that an estimated 70% of senior citizens will need at some point
during their lives. In order to prepare yourself for those
expenses, you'll need to make separate provisions outside
Medicare to ensure that you'll have the financial resources
necessary to cover the costs of care.
Nursing homes, long-term care, and the Medicare gap
Medicare covers many things, but the coverage it provides for
nursing homes and other types of long-term care are extremely
limited. Medicare Part A, which covers most inpatient care such
as hospital visits, does make a provision for covering the costs
of a skilled nursing facility. If you qualify, Medicare will pay
100% of the cost of skilled nursing facility for 20 days, and it
will cover all but a $157.50 per day copayment in 2015 for the
next 80 days of approved care at such a facility.
Source: Flickr user Mathew Honan.
However, in order to qualify for those services, you need to
have had a qualifying hospital stay of at least three days, and
the care you receive at the facility must be connected to the
treatment you were getting in your initial hospital visit. Once
your 100 days is up, you're responsible for all costs -- and
you'll need a break of at least 60 days in a row in order to end
your current benefit period and renew your benefits for future
More importantly, many people in nursing homes aren't
receiving skilled nursing services and therefore don't qualify
for Medicare benefits at all. If the only kind of care you need
is custodial care such as helping you get in and out of bed,
bathing, or getting dressed, then Medicare won't cover those
Source: Flickr user 808MAGIC.
When it comes to home health services, Medicare also has
limits. You're entitled to up to 100 home health visits under
Medicare Part A following a hospital stay, and Part B also
provides certain home health benefits. But to qualify, your
doctor has to certify that you're homebound, and you must need
skilled nursing care or certain other treatment such as physical
therapy, speech-language pathology, or occupational therapy
services. Again, Medicare won't cover purely personal care,
making seniors responsible for much of their own costs for
getting in-home help.
How to bridge the gap
Unfortunately, the costs that Medicare doesn't cover play a part
in most retirees' lives at some point during their retirement.
According to a study from the Department of Health and Human
Services, almost seven out of every 10 Americans turning age 65
will need long-term care at some point in their lives.
Most traditional insurance, including medical and disability
insurance, follow Medicare's rules in limiting coverage to those
whom are medically necessary and involved skilled, short-term
care. Even supplemental Medicare policies typically only cover
the $157.50 copayment for covered services and provide nothing
for long-term care.
In order to get insurance coverage for long-term care needs,
you'll need a specific long-term care insurance policy. These
specialized policies cover a wide array of services, ranging from
assisted living facilities and nursing homes to home-healthcare
and personal care needs. Premiums depend on the age at which you
buy insurance, the maximum daily coverage you choose, and the
lifetime maximum benefits the policy will provide. In general,
the older you are when you obtain long-term care insurance, the
higher your annual premiums will be. Moreover, many long-term
care policies include what are known as elimination periods,
which define initial time periods of three months or longer
during which you'll be solely responsible financially for
covering costs of care.
In addition, some states provide programs that assist with
certain care needs for senior citizens. Nutrition programs
deliver meals directly to many retirees' homes, and
transportation and personal-care assistance are aimed at making
lives a little easier. Those services by themselves won't address
many of the major needs people have, but they can nevertheless
help bridge some of the coverage gap in Medicare.
Medicare is a vital part of your long-term financial security
in retirement, and it covers many different services. But to
protect yourself against the needs for nursing and other
long-term care, you'll need to turn to alternatives to Medicare
to give yourself the peace of mind that you'll be able to cover
those extensive costs.
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Medicare in 2015: The Huge Healthcare Expense It
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