MEDICARE BLOG

Published: July 10th, 2024

Medicare is a federal program that provides millions of seniors comprehensive health care coverage. Although a very important social safety net, basic Medicare coverage doesn't cover many services, leaving seniors, and their heirs' assets at risk.

When aging into Medicare, it's important to factor in your potential out-of-pocket costs, and make sure your financial and estate planning strategy is setup properly to avoid depleting you or your family's assets.

Medicare beneficiaries often face out-of-pocket costs, including premiums, deductibles, copayments, and coinsurance. These expenses can accumulate, affecting your savings and assets. For instance:

• Part A and B premiums for higher income individuals
• Part A and B deductibles, co-payments and coinsurance
• Prescription drug costs, that are not covered by Part A or B
• Long-term care, including nursing home and assisted living

A majority of Medicare-age people rely on prescription drugs, physician care, and long-term care at some point, so how can you plan to cover these services without putting your assets at risk?

There are a variety of coverage options and planning strategies that should be looked at in order to fill those coverage gaps. Here are the most commonly recommend strategies:

Medicare Part D Plans

Basic Medicare (A and B) does not offer coverage for prescription drugs. Most people enroll in Medicare Part D plans that provides comprehensive coverage for medication, which is normally provided through a private insurance company. Coverage varies based on a variety of factors, so it's important to consult with a local Medicare agency in your area to find the best coverage.

Medigap Supplement Insurance

Medigap is a series of plans you can buy through private insurance companies that provides additional (supplement) coverage to help cover out-of-pocket costs associated with Basic Medicare (A and B). If you find yourself having extended in-patient care and physician care, out-of-pocket costs like co-payments, coinsurance, and deductible can add up quick. A properly selected Medigap plan can be the right choice. Although, Medigap plans can vary from state-to-state, so make sure you consult with a local Medicare agent to help select the right supplement plan.

Medicare Advantage Plans

Also known as Medicare Part C, these plans are also offered through private insurance carriers to provide coverage for dental , vision, and hearing, all services not covered by basic Medicare. And just like Part D and Medigap, coverage options can vary greatly.

Long-Term Care Insurance

Long-term care insurance is a popular option to help cover the costs for long-term care, including assisted living and nursing home care. This is another supplemental coverage option you can purchase through a 3rd party insurance provider, with the help of a licensed insurance advisor in your area.

Medicaid Insurance

Medicaid is a state-level health care program that only provides assistance to low-income seniors. Although Medicaid does help cover long-term care, there are strict eligibility requirements, and the coverage will vary from state-to-state. Depending on the laws, Medicaid can also seek reimbursement from the individual's state after the death (Estate Recovery), so implementing the necessary protection measures during the estate planning process is crucial.

Given the complexities of how Medicare and Medicaid interact with estate planning, working with experienced professionals is crucial. Estate planners, financial advisors, and elder law attorneys can provide guidance tailored to individual circumstances, helping to navigate the intricate rules and regulations.

To protect assets from being depleted by healthcare costs and Medicaid recovery, individuals can employ several strategies:

Irrevocable Trusts

Transferring assets into an irrevocable trust can help shield them from being counted toward Medicaid eligibility. However, this must be done well in advance, as Medicaid has a five-year look-back period.

Gifting

Strategically gifting assets to heirs while still living can reduce the size of the estate and potentially avoid Medicaid recovery, but this also needs to be planned carefully due to the look-back period.

Tyrone Carr & Associates (TCA) is a licensed Medicare agency with 2 decades of experience helping people make the best Medicare and Insurance decisions. TCA is located in Brighton, Michigan, and licensed in 20 states.

For more information about our services, contact our office today.