Why Elder Care and Medicare Is More Expensive Than You Think
The Caring Generation® Episode 178, October 18, 2023. If you are over age 65 or a caregiver, you may learn that your Medicare Plan choices can be more expensive than you think because of the long-term impact on your life after retirement. The coverage and benefits offered by Original Medicare, a Medicare Supplement, or Medicare Advantage set parameters for access to care. Caregiving expert Pamela D Wilson shares information to consider about health, finances, and retirement planning that most adults don’t realize to be important when choosing or changing Medicare Insurance plans.
Why Understanding Medicare Insurance Is Important if You Are Over Age 65 or a Caregiver
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This episode of The Caring Generation Podcast, the featured Medicare webinar, and this article offer information rarely considered when considering choosing a Medicare plan. Get the facts so that you can make a well-informed decision.
If you are a caregiver or an adult over 65, you may be shocked to learn that eldercare and Medicare is more expensive than you think if you choose a plan that doesn’t offer what you expect. Being healthy and having a job that provides health insurance benefits can result in a false sense of security about retirement planning. It can be a shock to learn that Medicare at age 65 does not pay for everything care-related.
It’s important to be knowledgeable about Medicare plan benefits and how your choices will affect access to care when and where you need it. Whether you plan to sign up for Medicare at 65 or change plans later, many things you may not think of can affect your health and retirement plans.
While a Medicare agent can help you complete the steps to finalize a plan, many have limited experience with the long-term impacts of the choices you make today.
Pamela D Wilson, a caregiving expert and professional fiduciary, offers insights rarely discussed in this webinar, article, and podcast.
This episode of The Caring Generation Podcast and the featured Medicare webinar offer information rarely considered when thinking about choosing the right Medicare plan. Get the facts so that you can make a well-informed decision.
Why Understanding Medicare is Important
If you are a caregiver, you may not give much thought to Medicare insurance until the person you care for is denied coverage, has difficulty with prescription coverage, or receives a bill that looks unreasonable.
When difficulties gaining approvals from Medicare Advantage health insurance providers or working with doctors arise, you may realize that Medicare is more expensive than you think if you don’t have all the details.
Medicare is complicated. If you don’t work in the healthcare industry or for an insurance company, it can feel nearly impossible to know what you should know and the question to ask of an insurance agent.
Misleading information about Medicare is everywhere on television and websites that do their best to make you believe they are government-sponsored. Consumer protections are being implemented to prevent health insurance agents from contacting individuals without written permission.
Let’s look at aspects that Medicare insurance agents or counseling agencies might not mention if they don’t understand your life situation or have personal experience with the consequences of plan choices
1 Why the transition from work to retirement can be a challenge if you don’t consider the effect of costs and inflation on a fixed income
2 How an early understanding of health care costs and the shift to a virtual world can impact retirement and Medicare planning
3 Why planning for changes in health, including the associated costs, is a practical approach to aging to avoid Medicare being more expensive than you think
1 Why the Transition From Being Fully Employed to Retirement Can Be a Challenge
There are many considerations around the transition from work to retirement. While many people dream of retirement to avoid work pressures, most don’t realize that the stress does not end when paid employment ends. The pressures of life that were work-related transfer to other parts of life.
- Daily routines change. You may not have to wake up at 5 a.m. to arrive at the office by 7 a.m. Instead, you may sleep in.
- All those daily meetings you loved or hated are gone from your schedule. You may find yourself with no daily routine and time on your hands.
- Not arriving at a physical work location or being virtually disconnected from co-workers may result in missing contact with familiar faces. You may feel alone or isolated because you no longer have routine communication with colleagues or friends.
In remote-first companies, there can be more balance between work and family. Socialization may be more likely to occur outside of the virtual workplace.
Income and a Cushion for Unexpected Expenses
Let’s talk about income. While employed, there may be opportunities for yearly raises, promotions, or other ways to increase your income.
When you retire and stop working, you live on a fixed income of social security, possibly a pension depending on where you worked, and money in investment or savings accounts plus home equity if you own a home.
Medicare is more expensive than you think when you don’t realize how health-related costs can hit your budget.
When monthly income does not change and costs continue to rise, you might feel panicked if there is no cushion between monthly income and expenses. An example is having an income of $2,500 a month with expenses of $1,500 a month. This leaves $1,000 of income to save, invest, travel, or pay unexpected or one-time expenses when elder care expenses and Medicare is more expensive than you think.
The Effect of Cost Increases and Inflation on a Fixed Income
What will happen over time is this $1,000 monthly cushion shrinks as the cost of gasoline, electricity, food, medical care, and other services increase. To make this real, let’s compare the value of money from 2010 to 2023 over a period of 13 years.
This comparison will give you an idea of how your income today, assuming you are 65, might cover your expenses when you are 78, and Medicare is more expensive than you think.
The value of $15,300 today equals $21,596.16 in purchasing power or a cumulative price increase of 41.15%. This means that prices in 2023 are 1.41 times as high as average prices since 2010.
Here are a few more examples of costs between 2010 and 2023:
- Gas prices increase from $2.73 to $3.99
- Bread per loaf $1.36 to $1.97
- Eggs per carton $179 to $2.06
- Chicken $1.27 per 1 lb of whole chicken to $1.90
- Electricity $0.12 KwH to $0.17
Note that these are averages, so depending on where you live, the increases can be lesser or greater.
When you look at inflation by category, housing, food and beverages, medical care, and transportation have seen the most significant increases. Which is probably no surprise.
The Effect of Time on a Fixed Income
So if you translate rising costs and inflation to a fixed income and the impact on retirement savings— assuming the same increases every 15 years—there will be a 40% impact on the amount of money you spend monthly due to cost increases of goods and services.
This can be scary if you don’t think about planning for retirement and paying for health care, and Medicare is more expensive than you think.
Reality Check: Will You Really Need Less Income in Retirement?
Many individuals choose to keep working after age 65 because they want to remain active or save money to create a cushion against future cost of living and price increases. You can sign up for Medicare and continue to work.
You may have heard that living costs decrease when you are retired versus being fully employed. Well—maybe, and maybe not.
If you work remotely, the idea that living expenses decrease in retirement may no longer be accurate because of other considerations that make Medicare more expensive than you think.
- Without a commute, you not only save time but you save transportation costs.
- If all your meetings occur over virtual platforms, you may only need some really nice shirts, tops, or jackets—no more worries about skirts, slacks, or shoes. You can work from home wearing shorts and your slippers.
- If you are a woman, other things like getting your nails done—maybe not so often.
- You also may be able to move to a suburb or a less expensive area of town if you physically don’t need to work at the building where your office is located.
Many companies are giving up office space to become remote only. As stressful and crazy as the COVID-19 pandemic might have been, the experience has changed many aspects of life.
What hasn’t changed is that good health is taken for granted when young. Being in good health means that you don’t see doctors or receive bills from healthcare providers.
When you are older, statements from doctors, Medicare, and health insurance companies can fill up your mailbox. Then you realize aging, health care, and Medicare is more expensive than you think.
2 How an Early Understanding of Health Care Costs Can Shed New Light on Retirement Planning
One of the most relevant aspects of the move to a virtual world is providing and accessing health care services. Remote doctor appointments can make it easier to get care at a lower cost. However, pros and cons for access to health care exist:
- If your symptoms are not severe, you don’t need lab tests, or 1:1 visible contact with your doctor is unnecessary, you can likely schedule an online and attend a telehealth appointment. The availability of virtual care appointments has benefited many Medicare beneficiaries who may lack transportation to appointments.
- The downside is that virtual appointments or telehealth can miss identifying health issues that cannot be easily identified if patients do not communicate concerns in a clear and concise manner.
- Telehealth may not be an option for adults who do not have access to computers, smartphones, or a fast Internet connection. Virtual care is impossible in parts of the United States due to a lack of infrastructure to support rural high-speed internet.
Access to health care services in rural or less populated areas might be challenging to imagine. If you live in Los Angeles, San Francisco, New York City, Chicago, or another highly populated area, healthcare providers might be everywhere.
You realize healthcare services might be more difficult to find when you go on vacation or venture to fly-over states where farmers, ranchers, and similar producers live and work. This might be when you realize Medicare is more expensive than you think if your Medicare plan offers no coverage when you travel away from home.
Health Care Access and Costs Are Based on Where You Live Down to the Zip Code
In less populated or rural areas, access to health care services can require taking time off work to drive a couple of hours to a larger city where medical clinics, hospitals, and other services exist.
The numbers can quickly add up when we relate access to available healthcare services—the costs of Medicare premiums and co-pays and services not covered by Medicare. If you live in a rural area, costs for tests and procedures can be higher due to limited availability versus the same costs in a large metropolitan area.
Some areas in the United States don’t have a nearby hospital nearby. There may be no access to nursing homes, no assisted living, or home health services. So, if you live in one of these areas and get sick, you may have to move to access care temporarily.
So Medicare can be more expensive than you think if access to care is limited by where you live. A move from a small town or rural area to a larger city can be costly.
When you are younger and working, you may dream of leaving the big city to live in a smaller town where you can drive across town in 20 minutes. A place where grocery stores are not crowded, schools are safe, and there are wide open spaces as far as you can see.
When you think of Medicare, the costs for Medigap and Medicare Advantage plans—different from Original Medicare—are based on zip codes. Medigap and Medicare Advantage Plan options and features can change yearly depending on your zip code.
But, if you have original Medicare, the costs are the same in every state.
While Medicare is a general term, there are different types of Medicare Insurance and Medicare plans.
- Original Medicare—the red, white, and blue card you receive at age 65 when you apply to your local Social Security Office.
- Medicare Supplement, also called Medigap, works with Original Medicare to pay additional costs.
- Medicare Advantage plans replace Original Medicare and offer different benefits.
Watch the webinar video on this page for detailed information about Medicare insurance and plans. Then proceed with a detailed investigation to compare costs and expenses for Original Medicare vs Medicare Advantage Plans.
Medicare Advantage Plans have been under scrutiny for putting profits over the care of Medicare beneficiaries by denying access to care. The effect of denials means that tax dollars that should pay for the health of Medicare recipients turn into profits for health insurance companies.
The federal government offers more financial incentives for Medicare Advantage, often called value-based care plans, than Original Medicare, referred to as fee for service. The results of the success of Advantage programs are mixed. The Medicare Advantage appeal for consumers is a zero-dollar premium, but at what cost to the U.S. healthcare system and to individual consumer’s health?
So, as you can see, the stage of your life, where and how you work, and your ability to save money, can play a large part in the long-term quality of your health and access to medical care.
Medicare Does Not Pay For Everything
- Medicare does not pay for all costs of care after the age of 65, as many believe.
- It is more likely that healthcare expenses will increase, not decrease, with age. The older you are, the more likely you are, statistically, to have one or more health problems that you deal with daily.
- Separate from Original Medicare, Medicare Supplement, Medigap, and Medicare Advantage Plans, there are services for persons over age 65 that you pay for privately, like home care or assisted living, unless you purchased a long-term care insurance plan that can cover these expenses.
Costs that you pay for privately can include in-home caregivers from $20 to $60 an hour, depending on where you live. Assisted Living or Memory Care ranges from $ 3,500 to $15,000 a month. Nursing home costs range from $150 to $500 a day.
These are expenses that most people cannot afford. Medicare may pay for some services but only under very limited conditions for a short period of time.
Age-related health conditions can make Medicare more expensive than you think. The healthcare system calls these health conditions conditions chronic diseases.
Know that Medicare Advantage plans with a zero-dollar premium may be costly in other ways. Plans that appear to be free or low-cost may offer fewer services, have restrictions you may not like, or have unexpected costs that are not directly financial. If you have ever appealed a health insurance claim, you know that it’s a complicated and time-intensive effort. Many consumers simply give up when Medicare Advantage plans delay or deny treatment.
How You Can Have Medicare and Still Be Underinsured
Being underinsured means having insurance coverage through a policy that does not cover the full cost of medical care and related services. Individuals with health insurance offered through the workplace or with Medicare plans can be underinsured.
The services that general health insurance or Medicare does not pay for can quickly drain bank accounts. For this reason, Medicare and all health insurance plans can be considered unaffordable.
Many Americans are concerned about healthcare affordability. Sixty-six percent of bankruptcies are caused directly by medical expenses, making it the leading cause of bankruptcy.
The Gap Between Health Insurance and Affordable Health Care
The gap between affordable health and health expenses that one can’t afford creates more health problems.
- Individuals do not go to the doctor if they are sick because they can’t afford to take time off work.
- Even if taking time off work is possible, concerns may exist about the co-pays for the appointment or paying for tests.
- Some people don’t want to go to the doctor because they don’t want to hear bad news about a health diagnosis.
- Others have had bad experiences with healthcare providers and feel uncomfortable returning to a medical office or clinic for care.
- Communication gaps exist between healthcare providers and consumers specific to the ability to understand healthcare plans and general healthcare information.
So, thinking about these costs, the rate of increase for consumer goods at about 40% every 15 years if those rates stay consistent, what is your financial savings plan to be 65 or older, pay your housing, food, utility, and other bills, your Medicare premiums, co-pays, deductibles, and any additional care you need Medicare does not cover that?
3 Why Planning for Changes in Health—Including the Associated Costs—is a Practical Approach to Aging
When you think about these expenses, it can be a little scary. You might consider saving the 8 dollars you spend at Starbucks daily in the drive-through. Or you might wait to buy another pair of tennis shoes until the pair you have is just about falling apart. Consumerism and the desire to have and buy things are in conflict with goals to save money for future events one cannot imagine.
The Costs of Aging
How to pay for care is a common worry among family caregivers and older adults that raises various questions.
- Why plan if I don’t have any money or if I am low-income?
- What is the best plan if I have a steady income and a little extra left over after paying bills?
- Why plan if I make so much money? I can pay for care and don’t need to rely on health insurance.
Somewhere in the middle of these questions is realizing that Medicare is more expensive than you think and taking steps to plan for your future.
No matter how much money you have—when healthcare problems strike, the emotional and physical distress you or the person you care for experiences can be extreme.
Working with healthcare providers, even with a good health insurance plan, can be challenging. Knowing your plan benefits and using them can prevent or delay more expensive care.
Having an ongoing relationship with a primary-care physician you trust is even more important.
Caregiving is not for the faint of heart or the weak. It’s hard work. And being the person who needs care can be even more stressful due to many uncertainties.
Learning to Use Medicare to Your Advantage
Planning early for potential health changes and related care costs can be beneficial if you have time to plan ahead for retirement. Unfortunately, not everyone has a long window of time to plan.
For these individuals whose time has passed by, a combination Medicare and Medicaid plan, called a D-SNP, may be the best course of action. Medicaid is a federal government program with different names depending on the state where you live. It’s a program that is funded through tax dollars, similar to Medicare, but it offers care for people who otherwise cannot afford to pay for care.
So, if you have time to plan and a well-paying job, appreciate your job and the ability to save money for retirement so that you can choose the best Medicare plan for you.
Learning How to Work With the Health Care Providers
If you are healthy and not yet a caregiver for someone in your family or a friend, you may have limited experience with medical offices, hospitals, and other healthcare providers.
Using your healthcare insurance is the best way to plan for potential health changes. Create a relationship with a primary care physician who can get to know you.
You might ask, “Why would I use my health insurance to see a doctor if I am healthy?” The answer is so that you can stay healthy.
You might also ask, “Why would I go to all that trouble when I can walk into Walmart, my grocery store, or a Walgreens or CVS and go to the health clinic there?” The answer is that these situations are what I call one and done.
The information from your in-store clinic visit may never be placed into your permanent health record. While the staff at these locations may be qualified to help you, they won’t be with you for the long run. They are there to address your immediate issue and nothing more.
A primary care physician who gets to know you can create a track record of your visits and blood tests. If you ask, this physician can help you prevent minor issues from becoming more significant later in life.
Being Sick is Expensive
Do you have high blood pressure? If so, how can you reduce your blood pressure without taking medication? Taking medicine is good if no alternative exists. However, taking medicine does not solve the underlying problem.
The health condition is still there. The medication covers it up.
So, if you continue with the habits that contributed to high blood pressure, sooner or later, you will be diagnosed with another related condition and then another. And then, pretty soon, if you are a caregiver, you might have as many conditions as the person you care for.
Why put yourself in a situation to be sick and sicker? Being sick is expensive.
Why not make a goal to be as healthy as possible to plan and save to live the retirement of your dreams instead of being sick and physically tied to your house because you don’t feel well?
Ask your spouse to commit to the same goal.
Poor health sidetracks the retirement dreams of married couples when one spouse—who refused to go to the doctor, change health habits, or take medication—suddenly has a stroke or life-changing health event.
Why be that person? Why put the spouse you love in a position of caring for you if lifestyle changes and good health habits can support living the retirement of your dreams?
These are hard conversations to have about events that may eventually happen. Not fully investigating your options and making the wrong choice for a health insurance plan can mean that Medicare is more expensive than you think.
If you have health issues or don’t feel well, approach the issues head-on. Hesitating or being afraid of becoming involved with the healthcare system will only add to worries. Establish regular care with a primary care physician and make the effort to improve your health.
Become an Active Participant in Your Health
The government largely runs health care and the health insurance market in the United States. The Centers for Medicare and Medicaid, NCQA, and the Office of the Inspector General (OIG) monitor health insurance programs, hospitals, doctors, and everything else health-related.
While seeing a primary care doctor is good, educating yourself about your health diagnosis and getting into the details of treatment and medication recommendations is essential.
Let’s look at a simple example. You have high cholesterol, and the doctor recommends taking medication instead of adjusting your diet to eat foods that are low in fat.
If possible, the best action is to work to reverse the condition before taking medications. If you have had the condition for some time and it’s not improving, then it may be practical to consider taking medicine.
But know the risks and the side effects. Do your research on the medication recommended. Cholesterol medications are controversial for the good they do and the side effects that they create.
Do Your Research
When researching online, search for “research articles or clinical studies from major healthcare publications” and relate this to a topic.
Valuable articles are available from medical journals like the Journal of the American Medical Association or JAMA, the New England Journal of Medicine, the Annals of Internal Medicine, the British Medical Association or BMJ, and others. Always look at the end of the article to identify conflicts of interest.
A conflict of interest in a medical publication might be a pharmaceutical company funding a research lab study and paying the researchers to support a conclusion.
For example, this medication is the perfect solution for X. X may be a man who is 65, weighs 200 lbs, and has diabetes. X may not be you.
When researching, also look for opposite conclusions. Find articles that disagree with the findings in the article you found. It is best to have a balanced view to make a good decision and not be swayed by inaccurate information.
Follow Up With Healthcare Providers
Doctors cannot make a good diagnosis if you don’t give them good information. If you don’t follow their recommendations, your health may not improve. Communication can be difficult. Medical records or tests can get lost.
Medical providers are not perfect. They make mistakes. You might have a diagnostic test and trust your doctor’s office to follow up. You never hear from them, so you think everything is okay—when it may not be. Ask for and review copies of your test results.
Because the healthcare system is so large, unexpected things happen. So, as a consumer or a patient, it’s up to you to be proactive and learn as much as possible to advocate for yourself.
Join online support groups, research medical journals, and contact local disease-specific organizations to become more educated about options and choices.
Understand what is happening in your state specific to health care legislation. Most people do not realize that the federal and state government makes healthcare decisions that consumers have to live with which can be why Medicare is more expensive than you think.
Legislators and persons employed by the federal government fall participate in the Federal Employees Health Benefits (FEHB) program. Federal government employees and legislators make healthcare rules for the general public—that necessarily affect them.
The Centers for Medicare and Medicaid manage Medicare and Medicaid programs with your state Department of Health and other state agencies. Legislators in your states propose and vote on healthcare legislation that may never affect them personally because of access to state or federal health benefits.
As previously mentioned, pharmaceutical companies pay researchers to prove what the pharma company wants them to prove. The campaigns of politicians are funded by insurance companies, special interest groups, and healthcare systems. Healthcare legislation may be in the best interest of the providers but is not always good for consumers and patients.
It’s easy to complain about the healthcare system in the United States when elder care and Medicare is more expensive than you think. If you want the system to change, become an advocate, get involved at the state and federal level, and take action to change the system so that more attention is given to the needs of consumers and patients.
When consumers realize that healthcare can be treated as a “consumer good” that benefits from their votes, dollars, and participation, it will be easier to restore balance to individual and patient needs versus other priorities of the government and healthcare systems.
When you plan ahead and have your voice heard, there will be no more surprises that Medicare is more expensive than you think. Instead, you will know that you can access the best care through the Medicare plan you choose.
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