“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.