How Will You Pay for Health Care When You're Retired?

Excerpted from
Don't Mess with My Money : The Dolans' No-Nonsense Lifetime Money Plan
By Ken Dolan, Daria Dolan

"If I'd known I was going to live so long, I'd have taken better care of myself." That quote has been attributed to a lot of famous old people. Eubie Blake, the celebrated ragtime pianist who died five days after his hundredth birthday, said it. George Bums said it. So have other nonagenarians and centenarians.

Another major concern: health care in retirement. A health care policy can cost more than $10,000 per year and that's not counting the cost of pharmaceutical benefits.

It's a fact.. . health benefits for today's retirees are shrinking, and those of as who will retire in the years ahead will have to shoulder even more of the health care burden ourselves. According to The Wall Street Journal, in a study of 56 retiree health plans offered by companies with at least 5,000 active employees, Watson Wyatt Worldwide, a Washington, D.C.-based consulting firm, found that 17% of the companies have "virtually eliminated" their liabilities for such benefits by reaffirming retirees to pay the FULL premiums, and 20% have already eliminated such plans altogether for new hires. So where do we start?

You must consider the efficacy of long-term-care insurance, which is best purchased while you are still working. Some employers are offering long-term-care policies for employees.

We talked about long-term-care policies for your parents in Chapter 8. Now it's time to think about getting them for yourself and your partner. See our cost table in Chapter 8. Medicaid kicks in if you spend down everything. If you are in a nursing home paid for by Medicaid, your spouse still has some protection in most states. Generally your spouse can keep at least $ 1.451 a month in income and half of your combined assets up to a maximum of $87,000, and the state cannot force you to sell your home while your spouse or dependent children are living, even if they don't live there. (These figures vary by state.)

It's impossible to know what prescription drugs you might need when you're a senior citizen, but suffice to say, for those who are now seniors, and those who will be, the costs are out of line. It's a problem for most seniors without substantial means. Medicare HMOs are dropping prescription drug coverage left and right. You can, however, check out state pharmacy assistance programs. More than 30 states have some kind of pharmacy aid program to help seniors who aren't below the poverty level. Contact your local chapter of AARP for information.

Alternative Lifestyles and Retirement

If you want to see a senior citizen free-for-all, just wait till widowed, divorced, single, and gay baby boomers start retiring and seeking companionship. Demographers expect the portion of senior couples who cohabit to grow dramatically in the 2010 and 2020 censuses. But even as of 2000, the U.S. Census found that almost twice as many seniors as a decade before were living as cohabiting couples. The 2000 census data showed that unmarried-partner households increased 12% over 1990.