Proper Planning Helps Mitigate Retiree Health Care Costs, Says Virginia Beach Long-Term Care Planning Attorney

Hook Law Center (formerly Oast & Hook)

Virginia Beach, VA (Law Firm Newswire) February 18, 2016 – Although retirees’ health-care expenses are often high, there are options to handle their potential medical expenses.

In a study conducted by Fidelity Investments, it was revealed that in 2014, a couple aged 65 would have required $220,000 to pay for health-care costs in their retirement years, excluding skilled nursing care. According to the American Council of Life Insurers, the average annual cost of care in a nursing home is approximately $81,000, with 2.6 years as the average time spent in a home by an elderly female patient, and 2.3 years for a male.

Some experts believe that health care costs for retirees are not as alarming as they might initially seem. In contrast to long-term care insurance, the expenses associated with medical insurance during retirement are made up of three principal parts. They are premiums for Medicare Part B, Medicare supplement premiums, or if not bought, Medicare co-pays, and premiums and co-pays for Medicare Part D, which covers prescription drugs.

“Health care costs during retirement and pre-retirement years can be expensive, but if clients plan early, they can avoid considerable costs, and will be more likely to increase their savings, thus preserving assets for their families,” said Andrew H. Hook, a prominent Virginia long-term care planning attorney with Hook Law Center with offices in Virginia Beach and northern Suffolk.

However, paying for health care in the retirement years prior to the time at which Medicare applies to an individual can be complicated. In addition to the financial aspect of health care costs, retirees are encouraged to consider wellness initiatives, and to try to obtain access to such programs, which can be available at local YMCAs, churches and clinics. A more expensive option is long-term care insurance. Another possibility is to become part of a continuing-care retirement community, some of which are affiliated with universities, which contain different types of care on campus.

In response to the increasing cost of long-term care insurance, there are some new products that are intended to help alleviate the financial burden associated with such insurance. Among them are a combination of life insurance and long-term care insurance, deferred-income annuities, which are tax-deferred, and Medicaid-compliant annuities.

A combination life insurance/long-term care policy requires clients to make one lump sum payment, usually between $50,000 and $200,000, depending on their age and health. Funds in an amount that is four or five times greater than the payment are accessible right away to cover the cost of long-term needs. Using deferred-income annuities, clients can defer their income until they reach age 70, at which point they begin to receive distributions from their individual retirement accounts (IRAs). And Medicaid-compliant annuities require the state to be a beneficiary, and the client to work with an elder care attorney.