Podcasts > Money Rehab with Nicole Lapin > How to Afford Healthcare, Ongoing Medical Care and Aging

How to Afford Healthcare, Ongoing Medical Care and Aging

By Money News Network

In this episode of Money Rehab, host Nicole Lapin addresses the financial aspects of healthcare and aging. She breaks down the key components of disability insurance and health coverage, including what most policies do and don't cover, and explains strategies for building a healthcare fund using various savings vehicles like high-yield accounts, bond ETFs, and CD ladders.

The episode explores tax-advantaged healthcare accounts, including HSAs and FSAs, and their contribution limits and benefits. Lapin also covers practical approaches to budgeting for private care services and outlines resources available through government programs and non-profit organizations. The information provided helps listeners understand their options for managing both current medical expenses and future healthcare costs.

How to Afford Healthcare, Ongoing Medical Care and Aging

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How to Afford Healthcare, Ongoing Medical Care and Aging

1-Page Summary

Insurance and Coverage For Healthcare and End-of-life Costs

Understanding disability insurance is crucial for financial planning. Short-term disability typically replaces 60-70% of your salary for a few months, while long-term disability covers 50-60% for several years or until retirement. Key policy elements include the elimination period, payout duration, and tax implications of benefits.

When reviewing health insurance, it's important to note that while most employer-sponsored plans and Medicare cover hospice care, they often don't include full-time home care, extended private nursing, or custodial care. This gap in coverage makes long-term care planning essential.

Saving and Investing Strategies for a Healthcare Fund

Creating a healthcare fund requires a focus on accessibility and stability. High-yield or money market accounts are recommended for healthcare savings, providing both liquidity and reliability. For those with taxable brokerage accounts, conservative options like short-term bond ETFs or CD ladders can help minimize volatility while maintaining accessibility.

Tax-advantaged Accounts Like HSAs and FSAs

Health Savings Accounts (HSAs) offer triple tax advantages: pre-tax contributions, tax-free growth, and tax-free withdrawals for medical expenses. For 2025, HSA contribution limits are set at $4,150 for individuals and $8,300 for families, with an additional $1,000 allowed for those over 55. FSAs provide an alternative for those ineligible for HSAs, though funds must be used within the plan year.

Medical expenses exceeding 7.5% of adjusted gross income may be tax-deductible, and retirement account withdrawals for qualified medical expenses can avoid the usual 10% early withdrawal penalty.

Budgeting and Negotiating For Private Care Services

Creating a comprehensive care budget is essential for managing future healthcare costs. This includes considering various levels of support, from part-time to overnight care. When working with home care agencies, negotiating rates and seeking discounts for scheduled hours can lead to significant savings.

Resources and Support Programs for Additional Assistance

Various support programs are available through Medicaid Waiver Programs and state Area Agencies on Aging. For those facing serious illnesses, organizations like Criage Cancer and CancerCare.org offer free legal, financial, and case management assistance, along with home care and transportation grants. United Policyholders can help ensure insurance policies cover necessary services.

1-Page Summary

Additional Materials

Clarifications

  • The elimination period in disability insurance is a waiting period after a disability occurs before benefits are paid out. It is like a deductible for disability insurance, where you need to be disabled for a certain period before receiving benefits. The length of the elimination period can vary from a few days to several months, depending on the policy. It is important to understand this period as it affects when you start receiving financial support during a disability.
  • In disability insurance, the tax implications of benefits depend on how the premiums were paid. If you paid for the disability insurance with after-tax dollars, the benefits are typically tax-free. However, if your employer paid for the insurance, the benefits may be taxable. Understanding this distinction can help you plan for any potential tax obligations when receiving disability benefits.
  • Custodial care in health insurance typically involves assistance with daily living activities like bathing, dressing, and eating for individuals who are unable to perform these tasks independently. Long-term care planning focuses on preparing for potential future needs related to chronic illness, disability, or cognitive impairment that may require ongoing custodial care services. This type of care is not usually covered by standard health insurance policies, highlighting the importance of considering long-term care insurance or alternative financial planning strategies.
  • CD ladders, or certificate of deposit ladders, are an investment strategy where you stagger the maturity dates of multiple CDs. This approach allows you to have access to a portion of your funds periodically while still benefiting from higher interest rates of longer-term CDs. By reinvesting the matured CDs into new longer-term CDs, you can maintain a balance between liquidity and maximizing returns over time. This strategy is often used for conservative investors looking for a predictable income stream and capital preservation.
  • Medical expenses exceeding 7.5% of adjusted gross income being tax-deductible means that if your total medical expenses in a year surpass 7.5% of your adjusted gross income, you can deduct the amount exceeding this threshold from your taxable income when filing your taxes. This deduction can help reduce your taxable income, potentially lowering the amount of taxes you owe. It's a way the tax system provides some relief for individuals facing significant medical costs.
  • Medicaid Waiver Programs allow states to offer long-term care services to individuals in their homes or communities instead of in institutions. These programs provide flexibility in Medicaid services delivery and financing, enabling individuals to receive care tailored to their needs outside of traditional healthcare settings. Various types of waivers exist, such as Home and Community-Based Services Waivers, Managed Care Waivers, and Research & Demonstration Projects, each serving different populations and addressing specific care needs. Medicaid Waiver Programs aim to support individuals who require long-term care by promoting independence and enhancing quality of life through community-based services.
  • United Policyholders is a non-profit organization that provides guidance and resources to individuals dealing with insurance-related issues, particularly during challenging times like natural disasters or health crises. They offer support in understanding insurance policies, navigating claims processes, and advocating for fair treatment from insurance companies. United Policyholders aims to empower consumers to make informed decisions and protect their rights when dealing with insurance matters. They provide educational materials, support networks, and advocacy efforts to help individuals and communities recover and rebuild after facing insurance challenges.

Counterarguments

  • While disability insurance is important, it may not be affordable or available to everyone, especially those with pre-existing conditions or those working in high-risk jobs.
  • The replacement rates for short-term and long-term disability insurance may not be sufficient for all individuals, especially those with higher expenses or debts.
  • Health insurance coverage gaps can be significant, but private insurance plans may offer riders or additional policies that cover these services, albeit at a higher cost.
  • High-yield accounts and conservative investments are generally safe, but they may not keep pace with the rising costs of healthcare, potentially eroding the real value of savings over time.
  • HSAs and FSAs are beneficial, but they are only available to those with qualifying high-deductible health plans or employer-sponsored plans, which may not be an option for everyone.
  • The tax-deductibility of medical expenses exceeding 7.5% of adjusted gross income is helpful, but it assumes that individuals have enough taxable income to benefit from the deduction.
  • While retirement account withdrawals for medical expenses can avoid penalties, this could compromise retirement savings and financial security in later years.
  • Creating a comprehensive care budget is essential, but unpredictable health events can make it difficult to estimate future healthcare costs accurately.
  • Negotiating rates with home care agencies may not always be possible, especially in areas with fewer providers or in situations where there is an urgent need for care.
  • Medicaid Waiver Programs and state Area Agencies on Aging are valuable resources, but they may have limited funding or long waiting lists, which can restrict access to services.
  • Organizations offering free assistance are crucial, but they may not have the resources to help everyone in need, and their services may vary widely in quality and availability.
  • United Policyholders can assist with insurance coverage, but policyholders may still face challenges with claims, denials, and the complexity of insurance policies.

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How to Afford Healthcare, Ongoing Medical Care and Aging

Insurance and Coverage For Healthcare and End-of-life Costs

Understanding the intricacies of insurance and coverage is essential for managing healthcare and end-of-life costs effectively.

Understand Your Disability Insurance: Elimination Period, Payout Duration, Taxable Benefits

Disability insurance is designed to replace a portion of your income if you are unable to work due to a disability. Short-term disability generally replaces around 60 to 70 percent of your salary for a duration that can range from a few weeks to a few months. In contrast, long-term disability may cover 50 to 60 percent of your salary for a much longer period, which could extend for several years or sometimes until retirement.

It is important to understand the specifics of your policy, such as the elimination period (the time before your benefits begin), payout duration (how long the benefits last), and whether the benefits are taxable or non-taxable. This knowledge is crucial for accurate budget planning and for understanding how to maintain financial stability in the face of an unexpected illness or injury.

Reviewing Your Health Insurance Can Reveal Hospice Care Coverage, Focusing On Comfort Over Curative Treatment, but May Not Include 24/7 Home Care, Private Nursing, or Custodial Care

Reviewing your health insurance policy can be enlightening, particularly with respect to hospice care coverage. Hospice care, which is generally covered by most employer-sponsored health plans including Medicare, focuses on comfort over curative treatment for individuals with terminal illnesses. However, these plans often do not encompass full-time home care services, private nursing beyond limited hours, or extended custodial care, which can include assistance with daily activiti ...

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Insurance and Coverage For Healthcare and End-of-life Costs

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Counterarguments

  • Disability insurance coverage percentages and durations can vary widely depending on the policy and the insurer, so the stated ranges may not be accurate for all policies.
  • Some disability insurance policies may offer coverage for a higher percentage of salary or include additional benefits, which is not mentioned in the text.
  • The elimination period and payout duration can be customized in some policies, offering more flexibility than implied.
  • Tax implications of disability benefits can be complex and may vary depending on additional factors such as other sources of income, which is not addressed in the text.
  • Hospice care coverage can vary significantly between different health insurance policies, and some may offer more comprehensive home care and nursing options.
  • There are insurance products specifically designed to cover long-term care needs, such as long-term care insurance, which is not mentioned in the text.
  • Some employer health plans may offer riders or additional coverage options for long-term care that are not discussed.
  • Medicare does cover some aspects of lo ...

Actionables

  • Create a disability insurance calculator using a simple spreadsheet to estimate potential benefits based on your current income. Input your salary and adjust the percentage fields to reflect the coverage rates of short-term and long-term disability insurance. Add columns for different scenarios, like varying lengths of the elimination period and taxable vs. non-taxable benefits. This will give you a clear picture of what you might receive in various situations and help you budget accordingly.
  • Develop a personal care savings plan by estimating future care costs that aren't covered by insurance. Research the average costs of 24/7 home care, private nursing, and custodial care in your area. Then, set up a dedicated savings account or a health savings account (HSA), if eligible, and contribute a calculated amount monthly to prepare for these potential expenses.
  • Use an app or online tool desi ...

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How to Afford Healthcare, Ongoing Medical Care and Aging

Saving and Investing Strategies for a Healthcare Fund

Creating a healthcare fund requires strategies focusing on liquidity, stability, and accessibility to ensure you can handle future care needs without major financial disruption.

Prioritize Liquidity and Stability For Healthcare Savings Using High-Yield or Money Market Accounts

When planning for future healthcare needs, it's critical to prioritize liquidity and stability. Funds needed for healthcare should be readily accessible and not subject to the uncertainties of the broader market. Considering high-yield or money market accounts for your healthcare savings can provide the needed stability and easy access.

Shift Taxable Brokerage Investments To Conservative Options Like Short-Term Bond ETFs or CD Ladders to Minimize Volatility

Minimizing volatility is key when it comes to investing in a healthcare fund. For savings held within taxable brokerage accounts, it's suggested to shift to more conservative investment options such as short-term bond ETFs or CD ladders. These tools provide a buffer against market fluctuations, ensuring funds remain stable and accessible, even when the broader market faces volatility.

Goal: Create an Accessible, Stable, Flexible Healthcare Fund Over Traditional Retirement Savings

The aim of a healthcare fund is to create a financial reserve that is easily accessible and not subject to the vo ...

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Saving and Investing Strategies for a Healthcare Fund

Additional Materials

Counterarguments

  • While liquidity and stability are important, some may argue that too much focus on these aspects could lead to missed opportunities for growth, especially if healthcare costs rise significantly due to inflation.
  • High-yield and money market accounts typically offer lower returns compared to other investment vehicles, which could lead to a shortfall in the healthcare fund over time.
  • Conservative investment options like short-term bond ETFs or CD ladders may not keep pace with the rising cost of healthcare, potentially eroding the purchasing power of the healthcare fund.
  • The recommendation to prioritize a healthcare fund over traditional retirement savings might not be suitable for everyone, as some individuals may have other more pressing financial priorities or different risk tolerances.
  • The advice to tailor healthcare savings to individual situations is sound, but it may not address the complexities of individual financial circumstances, such as varying levels of debt or income stability.
  • The text does not address the potential tax implications of shifting investments within taxable brokerage accounts, which could ...

Actionables

  • You can automate your savings by setting up a direct deposit from your paycheck to a dedicated healthcare savings account. By doing this, you ensure that a portion of your income is consistently allocated to healthcare without the need to manually transfer funds, making the process effortless and ensuring that your healthcare fund grows over time.
  • Create a "healthcare expense tracker" using a simple spreadsheet or budgeting app to monitor out-of-pocket medical expenses. This will help you understand your healthcare spending patterns and adjust your savings strategy accordingly. For example, if you notice that you're frequently purchasing prescription medications, you might decide to increase your healthcare fund contributions to cover these costs.
  • Engage in a yearly "healthcare financial check-up" where you review your healthca ...

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How to Afford Healthcare, Ongoing Medical Care and Aging

Tax-advantaged Accounts Like HSAs and FSAs

Understanding health savings accounts (HSAs) and flexible spending accounts (FSAs) can provide significant tax advantages for managing healthcare costs.

Maximize HSA Tax Benefits: Pre-tax Contributions, Tax-free Growth, Tax-free Medical Withdrawals With High-Deductible Plans

For those with high-deductible health plans, HSAs offer a triple tax advantage. These accounts feature pre-tax contributions, tax-free growth of funds, and tax-free withdrawals for qualified medical expenses. In 2025, the contribution limits for HSAs are set at $4,150 for individuals and $8,300 for families, while those over 55 can contribute an extra $1,000.

FSAs as an Alternative if Ineligible for an HSA

If you are ineligible for an HSA but can access an FSA, you can still use pre-tax dollars for medical expenses. However, FSAs operate on a 'use it or lose it' principle, meaning funds must be spent within the plan year or they're forfeited.

Medical Expenses Over 7.5% of AGI May Be Tax Deductible

Should your out-of-pocket medical expenses exceed 7.5% of your adjusted gross income (AGI), these costs can be itemized as deductions on your taxes. Deductible medical expenses include payments toward home nursing care, long-term care services, hospice, and transportation for medical appointments not covered by insurance.

Use Retirement Account Withdrawals for Qualified Medical Expenses Without ...

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Tax-advantaged Accounts Like HSAs and FSAs

Additional Materials

Counterarguments

  • HSAs are only available to those with high-deductible health plans, which may not be suitable for everyone, especially those who anticipate needing frequent medical care.
  • The 'use it or lose it' policy of FSAs can lead to wasteful spending at the end of the year as individuals rush to use up their funds.
  • The high threshold for tax-deductible medical expenses (over 7.5% of AGI) may be difficult for many people to reach, limiting the usefulness of this tax deduction.
  • The option to use retirement funds for medical expenses without penalty could potentially jeopardize retirement savings and financial security in later years.
  • The contribution limits for HSAs may not ...

Actionables

  • You can maximize your HSA by setting a calendar reminder to review and adjust your contributions annually, ensuring you're on track to hit the maximum limit and take full advantage of the tax benefits. By doing this, you'll be able to incrementally increase your contributions to match the updated limits, such as the $4,150 for individuals and $8,300 for families in 2025, and if you're over 55, remember to add the extra $1,000 catch-up contribution.
  • Create a dedicated savings account for potential medical expenses that exceed 7.5% of your AGI to ensure you have funds available that could be withdrawn without penalties if necessary. This account would be separate from your HSA or FSA and could be used to cover unexpected medical costs or planned procedures that might not be fully covered by insurance, thus providing a financial cushion that could prevent early withdrawals from your retirement accounts.
  • Develop a habit of tracking al ...

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How to Afford Healthcare, Ongoing Medical Care and Aging

Budgeting and Negotiating For Private Care Services

Planning for healthcare costs as one ages or as family members require increased support is essential. Creating a budget and negotiating rates are important steps to manage these potentially substantial expenses.

Create a Care Budget Incorporating Different Support Levels, Like Part-Time or Overnight Care, to Estimate Potential Future Healthcare Costs

Creating a detailed care budget is a crucial task. When establishing this budget, one should consider the varying costs associated with different levels of care such as part-time assistance or overnight supervision. This budget should encompass a range of services based on the individual's needs and provide a clear estimate of potential future healthcare costs. Having a well-thought-out care budget is an implied part of the planning process for managing healthcare expenses.

Negotiate With Home Care Agencies for Best Rates, Including Discounts for Scheduled Hours

Moreover, negotiating with home care agencies is key to finding the best possible rates. While it may not be always explicitly discussed, securing discounts for scheduling specific numbers of service hours can lead to substantial savings. It is beneficial to establish open communication with agencies to negotiate terms that suit both the client's financial capabilities and the caregiver's offerings.

Nursing, Home Health Aides, and Long-Term Care Can Be Expensive: Plan and Explore Cost-Saving Strategies

The cost of caregivers—whether they're private nurses, home health aides, or for long-term support—can be considerable. Planning for these expenses by exploring different cost-savi ...

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Budgeting and Negotiating For Private Care Services

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Counterarguments

  • While creating a detailed care budget is crucial, it can be challenging to predict future healthcare costs accurately due to the unpredictable nature of health issues and the fluctuating costs of care services.
  • Including different support levels in a care budget is important, but it may not account for sudden changes in the level of care needed, which can significantly impact costs.
  • Negotiating with home care agencies may not always result in the best rates if the agencies have fixed pricing or if there is a shortage of caregivers in the area.
  • Securing discounts for scheduled service hours assumes a level of predictability in care needs that may not exist for all individuals, potentially leading to either overpayment for unused hours or additional costs for unexpected care needs.
  • Planning for expenses related to nursing, home health aides, and long-term care is essential, but individuals may also need to consider the potential for needing specialized care that could ...

Actionables

  • You can use a healthcare expense tracking app to monitor and categorize your spending in real-time. By inputting expenses as they occur, you'll have a digital ledger that can help you identify patterns and potential areas for savings. For example, if you notice recurring costs for certain medications, you might explore generic alternatives or bulk purchasing options.
  • Consider forming a care-sharing cooperative with other families in your community. By pooling resources, you can share the cost of a full-time caregiver, reducing individual expenses while ensuring high-quality care. This could involve setting up a rotating schedule where the caregiver spends certain days with different families, or even sharing overnight care duties.
  • Engage in a healthcare barter system with professionals in your network. If you have skills ...

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How to Afford Healthcare, Ongoing Medical Care and Aging

Resources and Support Programs for Additional Assistance

Finding the right resources and support programs can be a crucial step for individuals needing assistance due to health, financial, or other personal challenges. There are several avenues available for additional help, ranging from Medicaid Waiver Programs to specific nonprofit organizations dedicated to providing aid.

Explore Medicaid Waiver Programs and Potential Impacts of Legislative Changes Like the Big Beautiful Bill on Eligibility and Access to In-home Care Subsidies or Respite Grants

Those in need of in-home care subsidies or respite care grants can explore Medicaid Waiver programs. These programs may be affected by legislative changes, such as proposed bills, which can alter eligibility and access. It's important to stay informed about these developments to adequately plan for the future.

Contact State's Area Agency On Aging For Support Programs

Your state's Area Agency on Aging is a valuable resource for identifying available support programs. They can provide guidance and direction to help you navigate through the various assistance options tailored to meet the needs of the aging population.

For individuals battling serious illnesses like cancer, nonprofits like Criage Cancer and CancerCare.org offer complimentary services that can make a bi ...

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Resources and Support Programs for Additional Assistance

Additional Materials

Clarifications

  • Medicaid Waiver Programs are state-specific initiatives that provide long-term care services to individuals who would typically require care in a nursing home but prefer to receive it in their own homes or communities. These programs offer a range of services such as personal care, respite care, and home modifications to support individuals with disabilities or chronic illnesses. Eligibility criteria, covered services, and application processes can vary by state, so it's essential to check with your state's Medicaid program for specific details. Legislative changes, like new bills, can impact these programs, potentially altering eligibility requirements and the availability of services.
  • State's Area Agency on Aging is a government-designated organization that provides information and services to older adults. They offer support programs tailored to the needs of the aging population, including assistance with healthcare, housing, transportation, and other essential services. These agencies act as a central point for seniors and their families to access resources and navigate the aging care system. Contacting your local Area Agency on Aging can help you find relevant support programs and services for elderly indiv ...

Counterarguments

  • Medicaid Waiver Programs may have complex eligibility requirements that can be difficult to navigate, potentially limiting access for those who need them most.
  • The impact of legislative changes like the Big Beautiful Bill on Medicaid Waiver programs is uncertain until the bill is fully understood, implemented, and its effects are observed.
  • While State's Area Agencies on Aging are intended to be helpful, they may be underfunded or understaffed, which can lead to inadequate support for some individuals seeking assistance.
  • Nonprofits like Criage Cancer and CancerCare.org, while providing valuable services, may not have the resource ...

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