Medicare confusion can lead to financial burden in retirement
Mar 01, 2012
A recent study from the Bankers Life and Casualty Company Center for a Secure Retirement found a large number of middle income retirees on Medicare do not understand the program's coverage and costs. This lack of knowledge or number of misconceptions is resulting in unexpected financial surprises and hardships.
The study found 33 percent of Medicare enrollees did not know how much the program covers for doctor's visits, and 31 percent were unsure about coverage for hospitalization. These two components are at the core of the program's health benefits. The study showed 49 percent of respondents do not understand their vision care and hearing care, both of which are services Medicare typically does not cover.
Long-term care was the least understood component of Medicare, and posed the most significant financial threat to Medicare enrollees who did not plan for the added expenses of in-home care services. The study found 65 percent of Medicare recipients did not know if the program covers long-term care or overestimated the long-term care coverage provided. For these consumers, long-term care expenses could add a financial burden on a household if proper retirement planning did not occur.
In response to unexpected expenses in retirement not being covered by Medicare, 78 percent of retirees made efforts to reduce their healthcare expenses. Sixty-nine percent switched to generic prescriptions, 22 percent avoiding doctor visits, 15 percent switched to a less expensive health plan and 12 percent split their pills to make prescriptions last longer. Many of these actions can be dangerous to retirees' health. Experts say, it would be smarter to invest in life insurance and other retirement planning products thay can potentially help pay for out of pocket expenses.
According to Martin Weiss research analyst Nilus Mattive, there are simple steps consumers can take when developing a retirement plan. It is important that no matter what financial products a consumer purchases, they still continue to set aside money for retirement savings. This will protect against market volatility or other failed investments from depleting retirement funds.
In addition, retirees still confused about their Medicare plans, benefits or programs should seek out education and resources on the topic to better understand what is available to them and what costs they are responsible for. A Medicare and retirement planning information session was recently held in Marion, Illinois, for example. The event was hosted by professional financial services representatives, who broke down the basics of Medicare coverage for participants, and how best to supplement the coverage with alternative financial products, KFVS reported.