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

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Welcome to the EnjoyMore30s Family Finance

podcast. The only podcast dedicated to making life more

enjoyable for young families. By hitting on the financial topics

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

from simply enjoying life.

Hello, and welcome to the seventh and final episode

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

covered the new restrictions inherited IRAs face when it

comes to the distribution timeline, the potentially huge

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

it.

Today's episode is titled Retiree Healthcare for Parents,

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

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

and the possible medical expenses they are exposed to.

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

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

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

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

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

expenses start right away way before you even welcome them

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

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

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

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

these were doctor recommended tests to make sure our unborn

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

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

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

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

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

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

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

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

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

Now Medicare is the federally run universal retiree healthcare

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

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

and provide certain medical coverages for those that meet

extremely stringent lower income levels. So unless you really

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

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

transition back to the more widely applicable Medicare. Now,

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

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

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

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

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

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

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

Part A for hospital insurance, and Part B for medical

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

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

leaving around 20% left which can certainly add up very

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

hole are Medigap often referred to as a Medicare supplement plan

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

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

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

should really make sure they have something. In very general

terms Medigap plans are a standardized add-on to your

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

Medigap. The biggest benefit here is you generally have more

flexibility in what doctors you use and where you receive care

and even though the plans are provided through insurance

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

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

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

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

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

Medicare Advantage actually replaces your original Medicare,

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

generally come with more restrictions on where you can

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

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

signing up for. It does generally include prescription

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

Plan, you would need to also purchase Part D for

prescriptions, although that Part D tends not to be overly

expensive.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

to have medical retirement benefits through their work,

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

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

generally already covered. Getting help from a qualified

individual for those that do not have the retirement medical

benefits through work, can be very important in helping to

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

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

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

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

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

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

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

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

health coverage through work to obtain a supplement policy and

receive guaranteed issue or acceptance. So 63 days, no

matter what the pre existing conditions, they have to be

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

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

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

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

health.

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

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

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

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

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

where the healthy spouse still needs resources of their own to

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

plan you know, otherwise, there are certain products available

through life insurance, annuities, and standalone

insurance products that can help bear at least some of that

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

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

usually needs to be involving excess resources, not those

resources that they're really depending on to provide

retirement income already. If they have certain annuities or

IRAs that are providing them with the income that they need

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

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

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

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

arise, what will you do?

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

fully aware of what coverage they have medically in

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

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

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

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

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

all. Remember that guaranteed issue or acceptance period right

after losing their existing medical coverage for obtaining

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

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

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

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

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

to have actually had the insurance or gotten the

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

situation that they're in.

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

implement what we cover then that is always just fantastic.

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

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

though or have any questions that you need help in

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

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

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

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

you listen. There are literally millions of young families out

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

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

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

bridge that financial mindset gap that almost certainly exists

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

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

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

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

of these conversations now, when there is still time for

adjustment improvement understanding, or you know, you

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

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

where these easily avoidable problems are run into and

experienced just completely unnecessarily.

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

Mindset series, helping you to take that breather, mentally

organized some of these main concepts that most speak to you

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

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

to make your life more enjoyable by avoiding the complications

potentially as they age, but really also make their lives

easier by avoiding the stresses that result from these same

complications. So until next week, thanks for joining me

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

again soon.

The conversations on this show are

Joe's opinions and provided for eneral information purposes

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

rofessional advice for your pecific situation. You should

lways seek appropriate advice rom a financial advisor,

ccountant, lawyer or other rofessional before acting upon

ny content or information found ere first. Joe is affiliated

ith New Horizons Wealth anagement LLC, a branch office

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

registered investment adviso member FINRA/SIPC