Top 5 Financial Planning Concerns for Retirees-(2) Healthcare and Long-Term Care Costs

Continuing our series on the top concerns of retirees for both financial and non-financial issues, here is the second Financial Planning concern.

(2) Healthcare and Long-Term Care Costs.

Retirees are often very surprised that Medicare is more limited than expected. While it does offer comprehensive care coverage for many healthcare needs, Medicare does not cover dental, vision, or long-term care costs. This last one, long-term care, can be a budget-buster for many retirees.

While some folks have long-term care insurance (LTCI), many do not, and find that they are unable to qualify for LTCI due to health conditions. Much like you can’t arrange for auto insurance to cover an accident you already had, if you need LTCI it’s too late to try to get insurance.

LTCI has traditional policies with annual payments and seemingly ever-increasing fees for some level of coverage if and when you qualify. I can honestly say that I have never had a client who told me they “couldn’t wait to use their long-term care insurance,” but have had many family members over the year being very grateful that their loved one did have LTCI when needed. But with traditional LTCI if you never qualify for it to begin, you may feel that you have “wasted” those premiums over the years. That is one reason that newer hybrid LTCI policies are increasing in popularity as they cover two risks for the insured person, the need for long-term care and a life insurance death benefit if long-term care is never needed or there are funds remaining. So the family members and the insured can feel that the premiums were not wasted after all.

One last Medicare “surprise” is the Income Related Monthly Adjustment Amount or IRMAA. This is an annual review of your income from your tax return of two years previously to see if you will be paying a higher Medicare premium for the year. IRMAA can significantly increase the costs in any given year but there is an appeal process if you qualify for a particular reason that your income used for the IRMAA was not reflective of your actual income due to retirement, death of a spouse, or other qualifying reasons. You can use Form SSA-44 to submit an appeal of an IRMAA charge.

At Safe Harbor Financial Advisors we do not sell any products such as long-term care insurance or Medicare supplemental insurance, but we have trusted providers and consultants we work with who help our clients.

Learn more about what a specialized retirement-focused, fiduciary, fee-only financial advisor can do for you by visiting our website at www.SafeHarbor.financial where you will find information about our cash flow approach to retirement planning, the value of using a Retirement Success Advocate, and a list of our standard projects and fees. Or you can call Safe Harbor at 302-313-6644 or email us at info@safeharborfinancialadvisors.com for an initial no-cost, no-obligation assessment meeting.

Stay tuned for the rest of the Top 5 Financial Planning Concerns for Retirees in future posts, as well as the Top 5 Non-Financial Planning Concerns for Retirees.