Planning ahead for Medicare and long-term care

As individuals approach retirement and later stages of life, navigating the complexities of healthcare becomes increasingly important. With rising costs, evolving insurance systems and the realities of aging, proactive planning is essential to ensure both financial security and quality of life. Below are some key considerations as you plan for your own healthcare today and in the future.

Understanding Medicare

Medicare is the federal health insurance program that primarily serves individuals who are 65 and older. As a general rule, people sign up for Medicare during a seven-month initial enrollment period that begins three months before the month they turn 65; however, individuals who continue to work after age 65 may have a different enrollment period, which could largely depend on the number of employees at their current employer. With limited exceptions, the failure to enroll in Medicare during the relevant period may result in penalties and lapses in coverage.

To understand Medicare, it’s important to become familiar with the four “parts” that are often referenced. Each part covers different types of healthcare services:

• Part A (Hospital Insurance): Covers hospital stays, inpatient mental health, skilled nursing facilities (under specific conditions), hospice and some home health services.
• Part B (Medical Insurance): Generally covers outpatient services and supplies considered medically necessary to treat a disease or condition, in addition to preventative services such as doctor visits.
• Part C (Medicare Advantage): Typically combines coverage for Parts A and B with prescription drug coverage through an HMO or PPO.
• Part D (Prescription Drug Coverage): Adds drug coverage to Parts A and B of Medicare.

Although technically not a part of Medicare, Medigap is supplemental insurance that is a common add-on to help pay costs not covered by Medicare, such as copayments, coinsurance and deductibles.

The rules that apply to Medicare, especially enrollment in Medicare, can be complex and are very fact specific. As you approach 65, it is important to review the rules of Medicare and how they may apply to your particular circumstances.

Long-term care insurance

Medicare and other health insurance generally do not cover long-term care services, so people often look to long-term care insurance to fill the potential gap between their health insurance and the cost of long-term care. Depending on the type of policy and coverage selected, long-term care insurance can provide coverage for long-term care in many settings — at home, in community settings, in assisted living facilities and in nursing homes. Coverage may include care advisory services, home care, adult day care, hospice care either at home or in a facility and respite care services. Some plans have benefits for coverage of informal in-home care provided by family, friends or independent caregivers.

In addition to traditional long-term care policies, there are policies known as “hybrid” policies that combine both a long-term care component and a death benefit based on benefits not used while you’re alive. While a hybrid policy is typically more expensive than a traditional long term care policy, this type of policy may be appealing because it returns money to your heirs if you don’t end up needing care.

Although procedures vary with each policy, coverage is generally triggered when the insured begins needing assistance to perform two out of the six activities of daily living (ADLs): dressing, bathing, transferring (moving in or out of a bed or chair), toileting, eating and continence. This number may vary from insurer to insurer. When the insured person reaches this stage, it triggers a waiting period from 30 to 90 days, also called the elimination period. The policy does not pay any expenses during this period. When the elimination period is over, the policy begins paying for associated living expenses up to the amount covered in the policy.

Long-term care policies, whether traditional or hybrid, can provide individuals with important options and financial support for managing the costs and complexities of extended care needs as they age. However, given how policy specifics can differ and each individual’s needs and ability to pay for healthcare costs, it’s important to carefully evaluate your needs, the cost of this insurance and any policy’s specifics.

Other healthcare considerations

When you plan for your long-term health needs, it is important that you advocate for yourself and stay ready for the unexpected. Keep the below tips top of mind as you navigate the healthcare system and manage your care:

• Create a comprehensive personal healthcare file — whether hard copies or electronic — that organizes medical history, prescriptions and important documents for easy access.
• Understand your healthcare coverage, including what services are included and any potential out-of-pocket costs, to avoid unexpected expenses.
• Build and maintaining strong relationships with your healthcare team to improve communication and ensure coordinated care.
• Prepare for doctor visits by listing questions and concerns ahead of time to help maximize the value of each appointment.
• Bring a loved one or trusted friend to appointments to help manage your care and concerns.
• Review your estate planning documents and beneficiary designations on a regular basis to ensure that your estate plan reflects your intentions and personal circumstances.
• Sign, and provide to your care team, a healthcare power of attorney to name an agent for your healthcare decisions and a HIPAA release form to grant access to your medical records to trusted individuals.

Proactive planning for Medicare and long-term care is vital to safeguard both your health and financial future as you age. By understanding your coverage options, considering supplemental strategies and staying organized, you can better navigate the complexities of healthcare and ensure peace of mind for yourself and your loved ones.

John Batterton  is a senior wealth strategist for CIBC Private Wealth in New York, with over 15 years of industry experience.