Unexpected or Unplanned Medical Expenses
As we age we expect to have medical expenses. Most of us plan for these by signing up for Medicare. If we’re poor, we sign up for Medicaid. Any large unexpected medical expenses can bump against our other major concern – money. Spending on medical needs is one of seniors’ biggest expenses. Some we can plan for, others may be more difficult. What are the issues? How do you address the issues?
When you have your health, your health-care costs in retirement will be high. And when you do not have your health, those costs will be even higher.
Note: Many states rename their Medicaid programs. For example, Tennessee calls the Medicaid programs Tenncare.
How Many Seniors Experience Unexpected Medical Expenses
Unplanned or unexpected medical expenses are not uncommon. They can emerge from many healthcare areas including premiums, deductibles, and copays. For example, an unexpected chronic illness might motivate a senior to select a new, higher premium, insurance plan. Also, the illness might result in large expense increases in the patient’s percentage of costs.
Sixty percent (60%) of retired Americans are surprised by unexpected medical bills. The Employee Benefit Research Institute (EBRI) examined retirement costs associated with program deductibles, premiums, copays, and other health expenses. Their findings are listed below.
Money Seniors Need To Cover Medical Expenses
Quick Primer On Medicare
Medicare has four parts: Part A, B, C, and D.
A – Hospitalization For Unexpected Medical Expenses
Medicare Part A is the first line in unexpected medical expenses. Part A helps cover hospitalization, care in a skilled nursing facility, hospice care, and some home health care. Most types of hospitalizations will be totally covered, minus your deductible. Your deductible is the portion you pay before the insurance pays. However, if your chronic illness is long or acute and requires a few consecutive months in the hospital, you can incur large unexpected expenses.
Cost: Generally free.
Medicare Part B
Covers outpatient services like preventive care, doctor’s visits, lab tests, mental health care, certain surgeries, some clinical trials, and durable medical equipment and supplies.
Cost: On average, about $125 a month.
C (also called Medicare Advantage) – Caps On Unexpected Medical Expenses
Allows individual enrollment in Medicare health plans sold by private insurance companies that contract with Medicare. Advantage plans come in many forms but the good ones place limits on an enrollee’s total out-of-pocket expenses. This means a senior can limit the total expenses for even the most chronic and long-lasting illness (e.g., cancer, etc.).
Medicare Part D
It helps cover prescription drug costs. Costs vary based on program deductibles, premiums and drugs covered.
Total Costs Seniors Pay
Depends on a variety of factors, including:
> The type of care
> Frequency of the care
> Medicare coverage option chosen
> Doctor fees applied (not all doctors charge the Medicare reimbursement ceiling – Medicare will pay their reimbursement amount, after that the patient pays)
> Whether there are other insurance policies in place to fill gaps in coverage.
Quick Primer On Medicaid
Federal-funded state-run health insurance program for low-income individuals, including seniors.
To qualify for Medicaid benefits, eligible seniors must “spend down” most of their available assets. Different states have different rules for qualification. Sates also have rules for what’s known as spousal impoverishment. This generally is pursued when one spouse is healthy but the other requires skilled nursing care whose costs would quickly bankrupt the couple. Once the financial floor is reached, Medicaid pays most medically needed costs. These include some types of long-term health care, including nursing home care, skilled care services at home, and hospice care.
There is something called dual eligibility. This is when a senior qualifies for both Medicaid and Medicare. The “dual eligible” criteria is based on complicated Medicaid rules. These can vary state-to-state so it’s important for low-income seniors to investigate how their state’s program works and how to qualify for benefits. Call Medicaid and ask them to help you understand your State’s benefits from “dual eligibility” and if advantageous for you, how you qualify.
Medicaid spend-down provisions and dual-eligible criteria can be very complicated. They also differ by state. CarePlanIt highly recommends you find an expert or a lawyer to help you navigate these issues.
Covering The Unknown Costs
Most senior health care needs are covered by Medicare. But gaps remain. That’s why insurance from private companies was created to cover this “gap.” Hence the common name as “Medigap,” also known as Medicare Supplement Insurance. This insurance is applied after Medicare pays its share of the approved amount for covered health care costs. Medigap coverage helps pay out-of-pocket expenses for co-payments and coinsurance, and deductibles that Medicare does not.
Medigap policies are different than Medicare Advantage Plans. Medigap policies fill “the gap” or supplement the benefits in your original Medicare plan. Most Medigap policies do not cover long-term care; dental or vision care, eyeglasses, hearing aids, or private-duty nursing.
> Coverage is paid directly to an insurance company
> It’s in addition to the coverage you bought for Medicare Part B
> Policies are available only to people with Medicare Part A and Medicare Part B
> Many people recommend you should sign up for Medigap coverage in the six months following your 65th because you could be denied coverage by insurers because of a pre-existing condition or pay a higher premium
> Standard Medigap policies are guaranteed renewable
> Medigap policy only covers one person.
> There are no spousal Medigap policies
Paying Unexpected Medical Expenses
Having a big medical bill you can’t pay is really scary. It’s also really common. As Carmen and I noted earlier 60% of seniors are surprised by health care costs. If you don’t have a comprehensive medical insurance plan in place like those described above, what do you do next?
Get help. Medicare, Medicaid, and additional medical services programs for the poor are complicated. If you’re sick, under stress, or not good at understanding complex scenarios, that’s OK. It’s very likely you have a child, friend, family member, or Church member that is better positioned to understand these issues or introduce you to someone that does. Get help.
If you make phone calls, get information and then confuse that information or are unable to follow through, all the services in the world won’t help. You won’t get through the application process. Get help.
Find someone to help you get, understand and act on the information you will be getting. If you can’t find someone from your family or your Church to help, try an information specialist at Eldercare Locator.
Step 1: Make Sure You Have Medicare
Another issue is some people simply don’t sign up for all their Medicare benefits. Call their 800 number and make sure you are fully enrolled. They are there to help.
Step 2: Medicaid for Adults
Medicaid is a joint program funded by the Federal Government and administered by the States. Over seventy million Americans get coverage through Medicaid programs, including eligible low-income adults, elderly adults and people with disabilities. There are certain eligibility requirements: financial, state residency, and citizenship. Call Medicaid, they are there to help. They can help you determine if you qualify, and then how to apply. Some Medicaid programs also offer programs for “Medically Needy.” These programs are State specific.
Other References For Unexpected Medical Expenses
More facts about Medicare Advantage Programs.