By Ryan Smolek
If you’re helping your parents, grandparents or other elderly loved ones plan for their retirement, you’re not alone. With more than 10,000 baby boomers retiring every day for the next 19 years, questions about planning and budgeting for retirement abound. As you’re assisting your loved one in getting ready for their golden years, one big consideration should be their health care and how they will pay for it. Here are three tips to share with your loved one on how they can best plan for their health care future:
- Set Enough Aside to Cover Costs
Most of us will likely live on a much smaller income after retirement, and while Medicare may cover many of the costs associated with your loved one’s health care, it doesn’t cover everything. A report by the Employee Benefit Research Institute estimates that a couple who wishes to have a 90 percent chance of having enough savings to cover their health care costs after age 65 needs to have $326,000 in the bank just for health expenses.
Don’t let your parents be unpleasantly surprised by the cost of health care. Urge them to save more money than they think they’ll need to go toward health-related costs.
- Shop Around for Medigap Coverage
Many seniors—for example, seniors who may be planning extended travel outside the United States, or who have chronic conditions that may necessitate frequent or long-term hospital stays—can especially benefit from a Medicare supplement plan or Medigap coverage. Yet while all Medigap plans of a certain type offer the same essential level of benefits, the cost of these plans can vary wildly. One insurance company may charge less than $80 per month for its Medigap Policy A coverage, while another agent may offer its Medigap Policy A at a monthly premium of nearly $200.
Encourage your loved ones to obtain several different quotes for any Medicare supplemental insurance they’re considering. Also, talk to them about the specific level of coverage they need so that you can make sure they aren’t paying for access to services they won’t likely use, nor are they overlooking any services from which they could truly benefit.
- Check Out the Fine Print
A final word of advice for caregivers is to help your loved ones review the specifics of any primary or supplemental health insurance offerings they’re considering, to ensure that it is the best plan for their needs. For example, if your father has a chronic condition that requires treatment with a specific drug, ensure that if Medicare doesn’t cover that particular drug, his Medigap plan will.
Also, pay attention to coverage limitations for specific services—don’t assume that all doctor visits will be covered equally. Services like physical or psychiatric therapy often have a set number of appointments that are covered before the insured is expected to absorb the costs, so dig a little deeper into policies to find out the particulars before helping your loved one select a plan. Doing so will help them keep costs down while confirming they get the health care services they need.
Planning Today for a Better Future
It’s great that you’re helping your loved one plan for their health care future, but to ensure that they're really ready, it’s important that you remember a few things: Encourage them to aggressively budget for future health care costs, and to shop around for any Medicare supplement coverage. Additionally, help them examine the fine print of any policy they're considering so he can avoid any unwelcome coverage surprises or costs. The time you spend helping them make informed decisions today will certainly pay off in the future.