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Will You Need Medicaid in Retirement?

Filed under: Managing Medical Costs

If you’re approaching retirement, you may be starting to think about health care costs after you stop working. Health care is a major source of expenses for many retirees. In fact, Fidelity estimates that the average retiree will spend $260,000 on out-of-pocket costs such as premiums, deductibles, copays and other medical expenses.1

Many retirees assume that government programs like Medicare and Medicaid will cover all their health care costs. That assumption is usually incorrect. Medicare is a valuable resource, but it only covers a portion of most health care costs. Some treatments aren’t covered by Medicare at all.

Medicaid covers a broad range of health care treatments, including long-term care. However, it is usually only available if you have limited income and resources.

Fortunately, you can plan ahead and address potential health care cost challenges. To plan sufficiently, though, it might help to fully understand Medicare and Medicaid and how they could impact your retirement. Below are a few common questions and answers about Medicaid:


What is Medicaid?

Medicaid is a government health care program designed to benefit the elderly, the disabled and the needy. Some states also extend Medicaid coverage to other individuals, depending on the state’s specific needs. The Medicaid program covers almost all health care expenses for those who qualify.

Retirees become eligible for Medicaid when they are approved for Supplemental Security Income (SSI). This is a program that provides supplemental income for those with limited income or assets. To qualify, you must have less than $2,000 in assets as an individual or $3,000 as a couple.2

Many elderly people rely on Medicaid in their later years, even if they entered retirement with a substantial amount of assets. This is often because of long-term care costs. An individual may deplete their assets paying for in-home care or a nursing home. Once they have few assets remaining, they may rely on Medicaid for future funding.


What’s the difference between Medicaid and Medicare?

Nearly all retirees rely on Medicare to some degree. You become eligible for Medicare at age 65, and you have a number of coverage options to choose from. Basic plans provide coverage for things like hospitalizations and doctor’s office visits. Other supplemental plans may provide additional coverage for things such as prescriptions and even dental work.

Medicare eligibility isn’t tied to your income or assets. If you’re age 65 or older, you likely qualify for Medicare coverage. Medicaid protection, on the other hand, is available only if you have few assets. While you will almost certainly use Medicare at some point, you may not ever need Medicaid protection.


Should you plan to use Medicaid in retirement?

There are some reasons why you may not want to rely on Medicaid later in life. One, obviously, is that if you’re using Medicaid, that means you have depleted your assets. You likely don’t want to be in that position.

Also, though, not all care providers accept Medicaid. You may find that the available care options under Medicaid don’t meet your expectations. Your options could be more diverse if you don’t have to rely on Medicaid for funding.

Fortunately, you can plan ahead for your long-term care needs. You may want to consider long-term care insurance, which can provide funding for needs that aren’t covered by Medicare.

Ready to develop your retirement health care funding strategy? Let’s talk about it. Contact us at Ambrose Financial and Insurance Services. We can help you analyze your needs and implement a plan. Let’s connect today and start the conversation.





Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

17110 – 2017/10/30