Medicaid Planning in New York NY: How to Prevent Losing Your Life Savings to Healthcare Costs in RetirementDec 05, 2013 / By: Barton P. Levine, Esq. / Category: Healthcare
If you are like many people you have worked hard all your life, saved methodically, and tried to invest wisely so that you can live comfortably during your retirement. With the rising costs of healthcare, however, you could easily lose your life savings trying to cover those costs unless you plan ahead. For many people, that means including Medicaid planning in your overall estate plan.
You probably know that healthcare expenses will rise when you reach your golden years; however, you may not realize exactly how much the average couple is expected to spend on healthcare expenses during their retirement years. A recent report by Fidelity Investments offers a startling glimpse into the future and shows us what we should plan on spending on healthcare in our senior years. According to the report, a couple retiring today at age 65 will spend, on average $220,000 on healthcare expenses assuming they live to the average life expectancy of 82 and 85 years old. These costs are out-of-pocket expenses after health insurance and/or Medicaid have paid out their portion.
For the average couple $220,000 is no small amount of money. Studies tell us that half of all Medicare beneficiaries have less than $77,500 in savings. Unfortunately, your own retirement healthcare expenses could actually be even more—significantly more. If you retire today and outlive the average life expectancy by living an additional ten years you can plan on incurring another $135,000 in expenses between you and your spouse or partner.
What may really push your retirement healthcare costs close to the $1 million mark though is long-term care. Experts tell us that if you live to be 65 years old you then stand a 70 percent chance of needing long-term care at some point in the future. At an average cost of around $77,000 a year, long-term care expenses alone can run through a lifetime of savings in a few short years. Don’t count on your health insurance policy or Medicare to cover those costs because they won’t. Long-term care insurance is available; however, a policy typically runs around $2,000 – $3,000 a year, an expense that many people cannot afford.
Medicaid Planning in New York NY
The Medicaid program may be your only option if you are faced with long-term care costs down the road. Medicaid, however, has income and resource limits that can prevent you from qualifying or that will require you to use all of your available resources before providing benefits. To prevent this from happening you need to start planning early on. By including Medicaid planning in your overall estate plan you should be able to put yourself in a position where you will qualify for Medicaid benefits should they be needed without losing your life savings.
The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.