Ready to Apply for Medicare? Watch This Story.
If you’re over the age of sixty-five, you may be in the coveted position to retire and separate from an employer. In separating from an employer, however, you may lose key benefits that you may have received as an employee — in particular, health insurance.
Going to the hospital and most things medical are expensive events that many retired individuals over the age of sixty-five don’t have the resources to pay without dipping into savings that were intended for living expenses. Placing a generation of citizens in the position to be one illness away from financial hardship is not only risky to the stability of a society, but also risky to that society’s economy in terms of humanely caring for individuals who need a hand.
To address this, President Johnson signed Medicare into law in 1965 after a history of significant developments toward enacting social insurance or safety nets for society. It has since proven to be needed — very few individuals retire without Medicare and Social Security as part of their retirement package.
Fast-forward 40 years, and the government now has a cost dilemma. Age sixty-five these days is considered young, and a person over that age has a much longer life expectancy than 40 years ago. Also, Baby Boomers are starting to turn sixty-five and this generation is larger than the previous and next generations combined which places a strain on Medicare funds.
Add to this situation the fact that the US government is in debt. If the government used credit cards, its creditors would have not only torn up the cards but set them on fire and buried them 50 feet below the ground.
Washington is naturally looking towards cutting social programs such as Medicare and Social Security in order to reduce spending and pay down debts. However, this could cause social and economic ramifications that would potentially place our society in a worse position.
Nevertheless, what should you do if Medicare benefits are cut?
Your “Medicare Cuts” Game Plan
Cuts could take the form of raising your deductible and lowering the percentage of first year medical costs to 50-80% of the first $5000 of your costs. Therefore, you may still be able to obtain Medicare coverage for medical costs, but may have to pay more out of pocket (which may unfortunately cause you to not see a doctor as frequently).
To cover the difference, life insurance companies and other private insurers could potentially see cuts in Medicare benefits as an opportunity to sell new accelerated benefit riders or supplemental plans to help you pay medical expenses. However, what if you don’t have the funds to pay higher insurance-related expenses? And how will competition and fair pricing be managed if at all?
The plus side to this debate is that sixty-five year old person today is generally healthier than 40 years ago. Therefore, working past sixty-five may be an option these days, which may mean a longer period for you to save for retirement in the future as well as a continuance in health insurance coverage.
This story is still developing, and there is still a chance for Medicare to not be touched at all if other budget cuts can be determined. Nevertheless, it’s never too early to review your financial plan and determine how you would cover yourself in the worst case scenarios. Your older self will thank you for thinking ahead.