Report: Newly Retired Couples Will Need $240K for Health Care

9:06 pm Estate Planning, Retirement Planning

health failing 150x150 Report: Newly Retired Couples Will Need $240K for Health CareA report by Fidelity Investments released today projects that newly retired couples will need an estimated $240,000 to cover their health care costs throughout retirement, according to an Associated Press article.

The projections are based on a 65-year-old couple retiring in 2012 with Medicare coverage, with a life expectancy of 85 for the wife and 82 for the husband.  Fidelity recalculates the projections every year; this year’s projection of $240,000 is an increase of four percent, from $230,000 last year.  The company said that this year’s estimate could change significantly, depending on the upcoming Supreme Court decision on the 2010 health care law, which lowered the projections since it passed.

Fidelity also noted that for the long term, retirees’ cost savings from the 2010 health care law will not be enough to offset other factors that are driving health care expenses up, including new medical technologies, more diagnostic testing and greater use of health care services.

The Fidelity estimate does not include long-term care or dental costs.  Most people do not have significant enough assets to pay for long-term care for one or both spouses, but still have too much to qualify for Medicaid.   While you can “spend down” your assets five years before you anticipate needing Medicaid benefits to qualify, this goes against the grain for most people who have saved their whole lives.

California is one of several states that offers long-term care partnership programs that allow residents to purchase enough insurance to cover the assets you want to protect.  The California Partnership for Long-Term Care is an alliance between the State of California and a select group of private insurers that provides long-term health care policies that allow you to keep a dollar’s worth of assets for each dollar your partnership policy pays out for long-term care, thus enabling you to still maintain your ownership of your assets.  In effect, you purchase a partnership policy that is equal to the amount of asset protection you want.

A partnership policy also allows you to pass assets to a spouse, children or other family members because it exempts protected assets from Medi-Cal Estate Recovery.

You owe it to yourself and your family to consult with an Orange County estate planning attorney about partnership policies and planning for your health care needs during retirement.

Get started by contacting our Orange County asset protection estate planning law firm as soon as possible.

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