Steps to Creating a Health Care Budget

By March 1, 2016Care Planning
Elderly woman writing letter

When planning for retirement and long-term care costs, it’s necessary to know the current and future health status of an individual. It’s good advice because it makes sense that as a person’s health declines, their medical costs will increase. But how does a person evaluate their future medical needs?

Attaining a sense of one’s health status now and for the future will make the difference between living with ease or hardship. For example, data from the Centers for Medicare and Medicaid, 2012, say that medical expenses accounted for 14 percent of a Medicare household budget. That’s close to three times higher than the non-Medicare households (5 percent) spend on health care. The data remained unchanged from 2002 to 2012, though total spending levels have increased. And the patients living with multiple chronic conditions cost up to seven times as much as those with one chronic illness.

The cost of premiums, co-pay requirements, and gaps in the Medicare benefits result in beneficiaries substantial expense on one’s household budget. According to Healthcare Insights, the average health care premium for a couple (65+) in good health will spend $266,589 over their lifetime. And if the premiums should include dental, vision, co-pays, and all out-of-pockets, costs could rise to $394,954. And for a couple (55) retiring after ten years, their total lifetime health care costs would be $463,849.

So, how does a person determine whether or not they have saved enough money or if they should continue working?

Since the majority of retirees purchase policies to cover Medicare deductibles and co-pays that offset out of pocket expenses, they don’t have to worry too much about catastrophic events. But if a retiree does not qualify for Medicare, their potential outlay for medical expenses could wipe out their savings.

To help individuals better prepare and forecast for retirement expenses and costs, I asked the Aging Council, “What do you recommend people do now to measure or evaluate their future health requirements?”

Understand the Risks
It’s essential to review regularly your health status and chronic conditions with your primary care doctor; every 1-2 years is a good idea, and certainly after a major new diagnosis or change in health. You want to be sure you understand what health crises and declines to anticipate. I always tell my patients that we are going to hope for the best, but plan for the likely and the entirely possible. Leslie Kernisan, MD, Better Health in Aging.

It is hard to predict the future, but you can have a good handle on your health/risks today. Make sure you have organized records (preferably stored online, with access for your health care surrogate) with basics about your family history, medications, diagnoses, allergies, etc. Be realistic when you look at the data and talk to providers/family about what you might need in the future. Alex Chamberlain, EasyLivingFl.

Make a list of all health needs. Determine what can be reversed or controlled with any lifestyle changes. Do the math to determine savings if that need or problem was gone or controlled. Create a plan to make that lifestyle change. As a person gets a handle on their health concerns, they’ll know how much money they spend on issues for future LTC. Rhonda Caudell, Endless Legacy.

We should all ask our doctors what steps we should take to maximize our chances for health aging. Certainly one thing we have to do is keep our minds active since I understand it somewhat reduces the risk of dementia. From a societal perspective, perhaps senior living advocates could work with the financial planning community to ensure that long-term health care is part of the planning process. Ted Teele, Touchtown.

Learn the Costs
It’s important to create an LTC plan to determine the Cost of Care today and for the future. I recommend consumers & advisors use Genworth’s calculator as it compares values where one lives today and up to two other locations where one might move to when they require care. It can be accessed here: GENWORTH.COM. Mike Padawer, Inertia Long-term Care.

Learn the Stages of Aging
We set the tone for our older years when we are young. How you take care of yourself in the earlier years will have a great impact on you later on. People need to address the financial piece of saving for long-term care. 401(k)s are not the total answer. And emotionally people need to know what it is like to grow older. So if you are not a caregiver now, at least, spend some time with older adults and learn. Anthony Cirillo, The Aging Experience.

Take a hard look at your lifestyle. Are you currently taking more than three prescription medications? Do you have diabetes, high blood pressure or COPD? These are all red flags that you need to have a plan in place. If you could no longer care for yourself and needed daily assistance what would you do? Have several plans for different outcomes. Know what each option will cost. Kathryn Watson, Find Houston Senior Care.

Carol Marak, an elder orphan advocate, columnist, and editor at She writes articles on senior-related concerns for the Huffington Post,, and many other health care sites. Carol earned a Certificate in the Fundamentals of Gerontology from the University of CA, Davis.

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