U.S. healthcare costs will continue to rise as the population ages. It is not easy to translate the rising costs in a way that’s meaningful to senior citizens and the impact on their finances. Senior citizens often have great anxiety over healthcare costs.
Many of them end up drawing from their savings to pay for medical costs. Others simply cannot afford the prescription drugs they need to manage chronic health conditions. Still others are working for longer to be able to afford their medical expenses later in life.
Gaps in Medicare
Almost all Americans are enrolled in Medicare, starting at age 65. However, there are some gaps in coverage where senior citizens need to pay the difference. This includes deductibles, co-payments or co-insurance.
For example, Medicare Part A covers up to 60 days of a hospital stay but a deductible needs to be paid. A hospital stay of more than 60 days requires a daily co-payment. After 150 days, there is no more coverage.
Under Medicare Part B, senior citizens also pay a deductible and only get 80% coverage for approved services. This means they are responsible for 20% of the payment for things like doctor’s visits, X-rays, ER visits and blood tests.
One of the biggest fears senior citizens have when it comes to retirement is the costs of long term care associated with sharply declining health or cognitive decline. The households with the lowest wealth are the ones most likely to need to tap into their savings for healthcare.
Many senior citizens are trying to work for longer and build more of a safety margin against high medical expenses late in life. They may be able to substantially increase their retirement standard of living by working for longer and this gives them more resources to meet out-of-pocket medical bills.
Medicare supplement plans
Medicare Supplement Plans are designed to fill in the gaps in Medicare coverage. Russell Noga of Medissups has many years of experience in the industry and offers advice about the best Medicare Supplement Plans 2021. Of the ten different medical supplement plans standardized by the government, Noga believes that Plan G will be most popular in 2021.
Senior citizens must be over 65 and enrolled in Medicare Part B to be eligible for enrollment in a Medical Supplement plan. It is wise for them to apply in the open enrollment period, which starts on the first day of the month of the 65th birthday and lasts for six months. During this period, the insurer cannot turn a person down for any pre-existing health conditions.
CHRONIC Care Act
The CHRONIC Care Act passed in 2018 paved the way for Medicare Advantage plans to cover various services to help members maintain and improve their health. This Act marked a shift in Medicare policy with the recognition that many factors contribute to health besides pure medical services.
Medicare Advantage Plans today may opt to pay for various non-medical services, from delivery of healthy meals to home modifications to accommodate wheelchairs.
Health plans that are offering new health-related benefits are either contracting with community-based organizations to provide them or developing the capacity to do it themselves. Some large nonprofit organizations are becoming partners to provide social services to Medicare Advantage plans.
However, the forays of health plans into providing social services is tending to go slowly due to trying to identify needs, build referral systems, monitor quality, and establish a positive return on investment.
Health-related expenses already absorb a large share of the income of senior citizens, and as that share keeps growing, it leaves less for other priorities.