At end of life, Medicare beneficiaries spend thousands out of pocket is the title of an article by Sarah Kliff, published on September 10, 2012, in the Washington Post.

This article reports on a recent study performed by Amy Kelly, a professor at Mt. Sinai School of Medicine.

“As more Baby Boomers retire,” Kelley writes, “A new generation of widows or widowers could face a sharply diminished financial future as they confront their recently-depleted nest egg following the illness and death of a spouse.”

This is because Medicare is among the fastest growing line items in the federal budget, already paying out $500 billion a year in benefits.  But Medicare does not pay for all health care expenses.

Dr. Kelly reports that a quarter of Medicare beneficiaries spend all of their wealth paying for medical and long-term care expenses during the last five years of their lives, with the average beneficiary spending $38,688.

My guess is that most of the $38,688 spending average comes from long-term care expenses, not from medical care or treatments.  In her report, Dr. Kelly mentions that dementia patients have the highest out-of-pocket expenses.  The American Association for Long-Term Care Insurance (AALTCI) concurs and has plenty of statistics proving that the longest lasting, most expensive long-term care insurance claims are from dementia patients. Medicare does a decent (but imperfect) job of paying for acute medical problems and treatments, but Medicare’s biggest shortcoming is in the area of payment for long-term care.

It is tragic to have a long decline after a long, healthy, active life. It is doubly tragic to decline and then see your money fly out the window paying for long-term care expenses. This is rarely what anybody plans to do. However, if you don’t converse about long-term car ahead of time, you are failing to plan. If you fail to plan, you plan to fail.