When Would You Like to Retire?

Len Harris Marketing Representative for LTC Global
ldh3008@comcast.net

Many people think they have the wherewithal to retire and enjoy their golden years. Travel, volunteer your time, visit family and friends-Surprise! Health care costs, never expected, are the biggest threat to retirement savings.

Yes, the government will provide some coverage and some employers will pay some retirement health costs, but the lion's share will still come from the retiree.   Deductibles and co-payments are not considered when putting money aside.   These expenses can be huge, especially to people susceptible to illness just as they near retirement.   It's estimated that the onset of an illness could siphon approximately 20% of a household's wealth.   "You could easily burn close to $1 million of your nest egg with out-of-pocket expenses for a major illness," according to George Ciccotello, director of Graduate Personal Finance at Georgia State University.  

People think Medicare will cover it all. It doesn't.    Without a Medicare supplement, the average couple aged 65 will spend $200,000 to cover medical costs in the average retirement. That's just for deductibles, the cost of Medicare, co-payments, non covered items and prescription drugs.   That's based on the husband living to 82 and the wife to 85 with no employer provided health insurance.

Unfortunately, one of the most overlooked forms of protection is Long Term Care Insurance   (LTCi).

So many people say they'll wait until they retire to look at or even think of purchasing a policy. A policy at age 50 might cost 40%-50% less than at age 65.   In addition 40% of those needing long term care are between the ages of 18-64.   Debilitating illnesses and    serious injuries can strike anyone. People don't plan for this, because "It can never happen to us".  

There are those agents who understand this and are making inroads at the worksite.   Showing an employer how this coverage can reduce absenteeism allows the agent to either have the employer offer a "core" plan and let the employee enhance the program, or allow the agent to talk directly to the employees.   Either way, LTCi helps both the employer and employee.

It is a fact, long term care insurance is the last thing people think of to protect their later years, but once purchased, there is a 97% retention rate.   After they've seen the light, it's kept for life.

This past week, the mainstream news outlets again discussed the “crisis” of uninsured Americans. A figure of approximately 40 million and roughly 15% of the population was promoted. The intimation, of course, being that this group of people cannot obtain medical treatment, and so that our system must be unfair. In the real world, most people in this uninsured group do gain access to health care if they desire it.

Most people in America have Health Insurance coverage through the workplace, and the economy has, no doubt, contributed to there being less insured people. There is another reality however, and that is that even with the figures being featured, 85% of Americans do have Health Insurance. Of the uninsured, many are young persons aged 20-30 who are healthy and won’t spend anything for coverage, and much of the rest of this population are persons between jobs who usually stay without coverage for a short period of time.

Is there a Health Care Crisis in America? This depends on whether the glass is viewed as half full or half empty. There are plenty of concerns, but the reality (I sure am using this word a lot) is that most people are able to find methods to become insured if they want to. We have some of the finest physicians and hospitals in the world right here in the United States, and many people from all over the globe come here seeking medical treatment. The main concern we have today is the cost of Health Care. This will be a long-range concern, and it is not because of defending lawsuits, the greedy insurance companies and HMO’s, or the Pharmaceutical industry. It is because of two main factors, the aging of America, and new technology, very expensive propositions that are not going to change.
Many people, in their heart of hearts, feel that socialized systems such as they have in some European nations and in Canada could be a solution. Health Care overall in the socialized systems however, is not as good as in the United States, and the economy suffers. The problems caused by socialism are so numerous that that would need to be another column.

So what, may you ask is the solution? The answer is that the solution will continue to evolve. Keeping the Heath Care Financing System healthy is what this is all about, and the American way will be to pursue an environment where there is more competition in the insurance marketplace, more favorable taxation benefits to businesses and individuals, and an awareness that quality medical treatment comes with a price tag.

Rick Stark is an insurance agent serving Broward County Florida since 1990 and is a past President of the Broward Association of Health Underwriters.