Artwork for podcast Enjoy More 30s: Family Finance
Retiree Healthcare for Parents: A Lot Isn’t Covered | Series 3.7
Episode 728th June 2021 • Enjoy More 30s: Family Finance • Joseph P. Okaly
00:00:00 00:11:56

Share Episode

Shownotes

What Medicare and Medicaid cover, and more importantly, what they don't when it comes to Long Term Care.

Securities offered through TFS Securities, Inc., Advisory Services through TFS Advisory Services, a SEC Registered Investment Advisor Member FINRA / SIPC. TFS Securities, Inc. located at 437 Newman Springs Road, Lincroft, NJ 07738 (732) 758-9300.

Transcripts

Voiceover Audio:

Welcome to the EnjoyMore30s Family Finance

Voiceover Audio:

podcast. The only podcast dedicated to making life more

Voiceover Audio:

enjoyable for young families. By hitting on the financial topics

Voiceover Audio:

that tend to weigh on us, stress us out, and distract our focus

Voiceover Audio:

from simply enjoying life.

Joseph Okaly:

Hello, and welcome to the seventh and final episode

Joseph Okaly:

of the Your Parent's Money Mindset series. Last episode, we

Joseph Okaly:

covered the new restrictions inherited IRAs face when it

Joseph Okaly:

comes to the distribution timeline, the potentially huge

Joseph Okaly:

negative tax impact, and what you can possibly do to minimize

Joseph Okaly:

it.

Joseph Okaly:

Today's episode is titled Retiree Healthcare for Parents,

Joseph Okaly:

A Lot Isn't Covered, where we're going to review some of the main

Joseph Okaly:

items you really should be aware of when it comes to your parents

Joseph Okaly:

and the possible medical expenses they are exposed to.

Joseph Okaly:

You will learn today what you need to know about these main

Joseph Okaly:

retiree medical items and what you can do and help your parents

Joseph Okaly:

to be aware of to try and best account for them. If there is a

Joseph Okaly:

primary episode to listen to in this series, this is the one.

Joseph Okaly:

Now as you probably know, having a baby is expensive. The

Joseph Okaly:

expenses start right away way before you even welcome them

Joseph Okaly:

into the world. When I had my first child Avery, I was like,

Joseph Okaly:

you know, I have health insurance so I'm probably

Joseph Okaly:

covered, right? Well, as you may have found out like I did, that

Joseph Okaly:

is not always the case. Some recommended tests now mind you,

Joseph Okaly:

these were doctor recommended tests to make sure our unborn

Joseph Okaly:

child was healthy, for us weren't covered. So we had to

Joseph Okaly:

pay out of pocket for those. Others we had to submit back to

Joseph Okaly:

insurance for consideration. The hospital charges 10s of 1000s,

Joseph Okaly:

of which a few 1000 winds up coming back to you. Who would

Joseph Okaly:

have thought that there were so many tolls on the road along the

Joseph Okaly:

way to having a child? So what you need to know is your parents

Joseph Okaly:

and their medical expenses can be much like this as they age.

Joseph Okaly:

I'm guessing you have heard of the terms Medicare and Medicaid

Joseph Okaly:

before. So that's kind of where I want to start.

Joseph Okaly:

Now Medicare is the federally run universal retiree healthcare

Joseph Okaly:

available at age 65. So it becomes your primary insurance.

Joseph Okaly:

Medicaid, on the other hand is a program run at the state level

Joseph Okaly:

and provide certain medical coverages for those that meet

Joseph Okaly:

extremely stringent lower income levels. So unless you really

Joseph Okaly:

make almost nothing, this tends not to be applicable for bass

Joseph Okaly:

medical coverage and speaking about Medicaid. Instead, let's

Joseph Okaly:

transition back to the more widely applicable Medicare. Now,

Joseph Okaly:

Now some of the main items not covered at all though through

Joseph Okaly:

we could spend easily an hour covering everything here. So I'm

Joseph Okaly:

going to really just focus on the parts that are likely most

Joseph Okaly:

pertinent for you to know about, the parts where the holes

Joseph Okaly:

generally occur. These two areas can be broken down into what

Joseph Okaly:

Medicare doesn't cover all of and what it doesn't cover any

Joseph Okaly:

of. Medicare has different parts, the main two parts being

Joseph Okaly:

Part A for hospital insurance, and Part B for medical

Joseph Okaly:

insurance. This base coverage, though, doesn't cover all of the

Joseph Okaly:

costs. Roughly 80% is covered after the initial deductible,

Joseph Okaly:

leaving around 20% left which can certainly add up very

Joseph Okaly:

quickly for larger medical items. The two ways to fill this

Joseph Okaly:

hole are Medigap often referred to as a Medicare supplement plan

Joseph Okaly:

Medicare are long term care and most dental and vision care. The

Joseph Okaly:

or a Medicare Advantage plan. Again, I could spend easily

Joseph Okaly:

hours diving into this, but the main takeaway is that they

Joseph Okaly:

should really make sure they have something. In very general

Joseph Okaly:

terms Medigap plans are a standardized add-on to your

Joseph Okaly:

original Medicare to help cover that remainder or gap, hence,

Joseph Okaly:

Medigap. The biggest benefit here is you generally have more

Joseph Okaly:

flexibility in what doctors you use and where you receive care

Joseph Okaly:

and even though the plans are provided through insurance

Joseph Okaly:

carriers, what they must include is standardized. So every Plan G

Joseph Okaly:

first one though Long Term Care is the biggie. For those that

Joseph Okaly:

is the same as every other Plan G. Most of our clients tend to

Joseph Okaly:

have these Medigap plans because of these reasons. So that's them

Joseph Okaly:

filling in that last 20% that Medicare is not covering.

Joseph Okaly:

Medicare Advantage actually replaces your original Medicare,

Joseph Okaly:

and it can sometimes be more cost effective, but it does

Joseph Okaly:

generally come with more restrictions on where you can

Joseph Okaly:

receive care and the plans are not standardized. So you really

Joseph Okaly:

need to make sure you carefully review what you're actually

Joseph Okaly:

signing up for. It does generally include prescription

Joseph Okaly:

coverage, though, which is a benefit, whereas in a Medigap

Joseph Okaly:

Plan, you would need to also purchase Part D for

Joseph Okaly:

prescriptions, although that Part D tends not to be overly

Joseph Okaly:

expensive.

Joseph Okaly:

are not familiar, long term care can be amazingly expensive and

Joseph Okaly:

amazing in a bad way. In New Jersey, you can easily hit six

Joseph Okaly:

figures a year for the highest levels of care. I've seen places

Joseph Okaly:

in Arizona be less than $40,000 for similar care so it really is

Joseph Okaly:

dependent on where you live, but as you can see, none of it is

Joseph Okaly:

cheap. Most people kind of just assume that Medicare is, you

Joseph Okaly:

know, going to cover it. "I've heard of Medicare, I know that

Joseph Okaly:

everybody has it, it kind of covers my health related stuff.

Joseph Okaly:

So long term care is probably lumped in there, right?" But it

Joseph Okaly:

does not cover you in the way that you think Medicare is going

Joseph Okaly:

to cover them as they get sick. But let me say, again, long term

Joseph Okaly:

care services are not covered. So what can you do? The first

Joseph Okaly:

thing is to make sure that your pre retiring parents know what

Joseph Okaly:

they're going to use to bridge the gap. If your parents happen

Joseph Okaly:

to have medical retirement benefits through their work,

Joseph Okaly:

which is something you really don't see too much going forward

Joseph Okaly:

anymore, this will act as their supplemental. So they're

Joseph Okaly:

generally already covered. Getting help from a qualified

Joseph Okaly:

individual for those that do not have the retirement medical

Joseph Okaly:

benefits through work, can be very important in helping to

Joseph Okaly:

make sure the right decision is made. If you do get help from a

Joseph Okaly:

qualified individual, just make sure to ask them, do they only

Joseph Okaly:

do Medicare? Do they do a lot of other things as well, just as so

Joseph Okaly:

you're aware kind of where they are coming from. Is Medicare

Joseph Okaly:

really the only thing that they do or is it just one of many

Joseph Okaly:

things that they may want to now discuss with you. The biggest

Joseph Okaly:

part of all of this though, may be what they do right after

Joseph Okaly:

retirement. They have 63 days, once they lose their existing

Joseph Okaly:

health coverage through work to obtain a supplement policy and

Joseph Okaly:

receive guaranteed issue or acceptance. So 63 days, no

Joseph Okaly:

matter what the pre existing conditions, they have to be

Joseph Okaly:

accepted. That's why this initial window after they retire

Joseph Okaly:

is so important. It's huge, do not miss it. If you miss it,

Joseph Okaly:

then you will have to qualify for the coverage. So this is a

Joseph Okaly:

huge point for those parents that may not be in the best of

Joseph Okaly:

health.

Joseph Okaly:

Lastly, what you can do when it comes to long term care is have

Joseph Okaly:

a plan. At least then you'll know where you stand. Medicaid

Joseph Okaly:

in relation to long term care only kicks in when you have

Joseph Okaly:

spent down virtually all of your assets. So that is not something

Joseph Okaly:

to really rely on, especially if you're in a marriage situation

Joseph Okaly:

where the healthy spouse still needs resources of their own to

Joseph Okaly:

survive. Home equity can be in an emergency kind of a backup

Joseph Okaly:

plan you know, otherwise, there are certain products available

Joseph Okaly:

through life insurance, annuities, and standalone

Joseph Okaly:

insurance products that can help bear at least some of that

Joseph Okaly:

expense. Here though, is really where you're going to probably

Joseph Okaly:

need an advisor or at least some financial planning, as it

Joseph Okaly:

usually needs to be involving excess resources, not those

Joseph Okaly:

resources that they're really depending on to provide

Joseph Okaly:

retirement income already. If they have certain annuities or

Joseph Okaly:

IRAs that are providing them with the income that they need

Joseph Okaly:

in retirement, you can't use those as a long term care plan

Joseph Okaly:

necessarily, because they're kind of already spoken for,

Joseph Okaly:

especially again in that married situation. The key though, is to

Joseph Okaly:

have some kind of a plan, God forbid Long Term Care does

Joseph Okaly:

arise, what will you do?

Joseph Okaly:

So the recap for today is to realize your parents may not be

Joseph Okaly:

fully aware of what coverage they have medically in

Joseph Okaly:

retirement, and could possibly be assuming, you know, they're

Joseph Okaly:

more fully covered than they actually are. So it's really

Joseph Okaly:

important to talk to them about what they may have, citing that

Joseph Okaly:

there are certain things that are only, you know, partially

Joseph Okaly:

covered by Medicare, and others just flat out not covered at

Joseph Okaly:

all. Remember that guaranteed issue or acceptance period right

Joseph Okaly:

after losing their existing medical coverage for obtaining

Joseph Okaly:

that supplemental is really, really important. And even if a

Joseph Okaly:

rough plan of what would happen our long term care situation is

Joseph Okaly:

really highly recommended whether it's we're going to go

Joseph Okaly:

to our home equity, we have this account over here that we're not

Joseph Okaly:

touching intentionally or you know, maybe you're lucky enough

Joseph Okaly:

to have actually had the insurance or gotten the

Joseph Okaly:

insurance you know back in the day so see what kind of

Joseph Okaly:

situation that they're in.

Joseph Okaly:

As always, thanks for tuning in today. If you are able to

Joseph Okaly:

implement what we cover then that is always just fantastic.

Joseph Okaly:

You have less to worry about then before you can focus more

Joseph Okaly:

on enjoying life. If you are wanting help with these things

Joseph Okaly:

though or have any questions that you need help in

Joseph Okaly:

clarifying, as always check out the Ask Joe section on the

Joseph Okaly:

show's website www.enjoymore30s.com. That's

Joseph Okaly:

enjoy more three zero s.com. If you enjoyed this episode, please

Joseph Okaly:

make sure to subscribe, review us on Apple podcasts or wherever

Joseph Okaly:

you listen. There are literally millions of young families out

Joseph Okaly:

there I'm trying to reach and help just like you.

Joseph Okaly:

Overall in the series, I really, really hope that you were able

Joseph Okaly:

to pull some great pieces of information out of it and help

Joseph Okaly:

bridge that financial mindset gap that almost certainly exists

Joseph Okaly:

between you and your parents to some degree. I can't recommend

Joseph Okaly:

enough to not just take the easy route and avoid all these

Joseph Okaly:

financial conversations. Because really, the truth is, every one

Joseph Okaly:

of us will pass away at some point so it's either having some

Joseph Okaly:

of these conversations now, when there is still time for

Joseph Okaly:

adjustment improvement understanding, or you know, you

Joseph Okaly:

could do the alternative and just wait until the end and hope

Joseph Okaly:

it all just works out. We've seen just too many households

Joseph Okaly:

where these easily avoidable problems are run into and

Joseph Okaly:

experienced just completely unnecessarily.

Joseph Okaly:

The next episode will be the recap of the Your Parent's Money

Joseph Okaly:

Mindset series, helping you to take that breather, mentally

Joseph Okaly:

organized some of these main concepts that most speak to you

Joseph Okaly:

or you think are the most relevant for your parents, and

Joseph Okaly:

take even one step forward. These things are not only going

Joseph Okaly:

to make your life more enjoyable by avoiding the complications

Joseph Okaly:

potentially as they age, but really also make their lives

Joseph Okaly:

easier by avoiding the stresses that result from these same

Joseph Okaly:

complications. So until next week, thanks for joining me

Joseph Okaly:

today, and I very much look forward to connecting with you

Joseph Okaly:

again soon.

Voiceover Audio:

The conversations on this show are

Voiceover Audio:

Joe's opinions and provided for eneral information purposes

Voiceover Audio:

nly. They do not constitute ccounting, legal tax or other

Voiceover Audio:

rofessional advice for your pecific situation. You should

Voiceover Audio:

lways seek appropriate advice rom a financial advisor,

Voiceover Audio:

ccountant, lawyer or other rofessional before acting upon

Voiceover Audio:

ny content or information found ere first. Joe is affiliated

Voiceover Audio:

ith New Horizons Wealth anagement LLC, a branch office

Voiceover Audio:

f TFS Securities, Inc., and TF Advisory Services an SE

Voiceover Audio:

registered investment adviso member FINRA/SIPC

Links