8 Must-do’s for seniors who want to avoid medical debt
By Andrew Housser
On Oct. 15, open enrollment began for current Medicare recipients. New Medicare enrollees have their own enrollment periods. For people enrolling in health plans through the Affordable Care Act, open enrollment begins Nov. 1.
If that sounds complicated, it is. For many seniors, it is especially complex. Even for those 65 and older, Medicare does not cover all medical expenses and procedures. As a result, medical bills can saddle seniors with thousands of dollars in expenses. Perhaps that is why, in some studies, seniors cite medical bills as their greatest fear.
October is Organize Your Medical Information Month. Whether it’s the little things or major matters, now is the time to plan and take action.
Plan savings to cover medical costs. Does your retirement account include enough for medical expenses you may need to pay? A recent analysis found couples might need $350,000 or more for medical bills after retirement. Check your progress with an online retirement calculator to see if you are on track. If you fall short, talk with a financial advisor about your options.
Understand Medicare options and costs. First, remember to sign up for Medicare at the right time. Most people are eligible to enroll in Medicare beginning three months before their 65th birthday. Enrollment continues until three months after they turn 65. (The age 65 rule applies even to those whose full retirement age is later.) Medicare enrollment varies, depending on several factors. Employees who have coverage through an employer may want to postpone enrollment in Part A (hospital coverage) or Part B (medical coverage), for example.
If you miss your enrollment period, you may have to pay a late-enrollment penalty. You also may be unable to sign up until the General Enrollment Period, between January and March. In that case, coverage may not begin until July of the year you sign up. You can choose standard Medicare or a Medicare Advantage plan. The latter often offers lower out-of-pocket costs, but with a higher monthly premium, for coverage through an HMO or PPO. You also will need to decide if you want to enroll in Part D for prescription coverage. Each of these options has costs.
Gather personal information in one place. Make a list of information a loved one or other caregiver might need if you are hospitalized or unable to manage your own health for a period of time. Include medical providers, medical history, daily medications, and locations of medical and legal documents, such as a will and advance directive. Use a premade checklist or make your own.
Take advantage of apps. If you are technologically savvy – like the 42 percent of seniors who own a smartphone – you can tap an app to track your medical data. The App Store and Google Play both offer several. You also may be able to connect with your doctor’s office with an app like MyChart. Ask your doctor or insurance company for recommendations. Tell your spouse, adult children or another emergency contact where to find your information.
Review bills carefully. Studies have found that 49 percent of Medicare medical bills contain errors or overcharges. When you receive a bill for a procedure, hospitalization or nursing care, take time to review it for accuracy. If you received only a total due, request an itemized list of services provided. Be sure you have all related bills, such as those from individual doctors, radiology and anesthesiology providers, and any emergency room care. Call your provider’s billing office if you have questions – or hire a billing advocate to help.
Avoid putting medical expenses on credit cards. In a survey on credit card debt conducted by Demos with AARP, more than half of adults older than 50 had medical debt on their credit cards. Instead of charging medical bills, talk with your medical providers up front. Ask about a payment plan that you can afford.
Examine long-term care options. Assisted living care averages more than $3,000 a month. Medicare or other health insurance may not cover these costs. To help, many people turn to long-term care insurance, but this, too, is a pricey option. Premiums average about $2,700 annually. If you let coverage lapse, you will lose the benefit. A new option is short-term-care coverage. For about half the premium, you can receive benefits for a limited term (about a year).
Seek help if a limited income makes it hard to pay for health care. Two programs can reduce health care costs for people who qualify because of a restricted income. States offer Medicare Savings Programs, which can help pay Part B premiums (about $134 per month for most people). The federal government’s Extra Help program offers less-expensive coverage for prescription medications (Part D). Find out if you qualify – or get other help – by visiting shiptacenter.org and selecting your state’s State Health Insurance Program (SHIP).
Planning how you will handle medical expenses lets you consider all your options. Some people may wish to downsize your home; others may look into a reverse mortgage to provide more financial leverage. Everyone should have an advanced planning directive that specifies their end-of-life wishes. Most of all, this type of organization and planning can remove some common retirement worries.
|Andrew Housser is co-founder and CEO of Freedom Financial Network. The family of companies, providing innovative solutions that empower people to live healthier financial lives, includes Freedom Debt Relief and Bills.com. Housser holds a Master of Business Administration degree from Stanford University’s Graduate School of Business, and a Bachelor of Arts degree from Dartmouth College.|