How many seniors deny themselves Healthcare in retirement?

As financial and retirement planners, we spend a great deal of time trying to educate our retiring and our retired clients on the health benefits in they must rely upon in retirement – Medicare, Medicare supplements, Medicare PPO (Medicare Plan C), Medicare Part D (the Drug plan) and retiree benefits that they may or may not have as a retirement benefit, depending upon their company.  However, a recent family death caused me to come face to face with the fact that, despite our own best efforts,  the efforts of the media, and the writings of financial planning industry as a whole, the vast majority of individuals – especially seniors – may not fully understand the health benefits that they have in retirement.  This lack of full understanding may cause them to be too frugal with their health care, and they may deny themselves reasonable health care because of the fear of the cost they might bear.  My own experience brought me face-to-face with this reality.

Two weeks ago, my beloved grandmother passed away from a massive stroke.  Unfortunately, her death was not instantaneous and, after an emergency airlift and 2 ambulance rides, she spent nearly a week in the intensive care unit of a regional hospital as a team of doctors and surgeons, in consultation with the family, tried to determine if she would survive.  As my grandfather stood helplessly by her side as the medical team efficiently performed their duties, he also began to suffer heart palpitations and stroke symptoms and collapsed, having to be admitted to the hospital himself.  Fortunately, his symptoms were not the result of a heart attack or stroke, but were instead symptoms of the immense stress he was understandably suffering by watching his bride of 69 years struggle for her life.

After only two days, my grandfather was doing fine and his vitals were strong – but clearly he was still suffering from a great deal of anxiety, and was physically feeble from a “trick” knee that had bothered him for several years.  As I and other members of the family spoke with him – it became clear to us that a part of his stress was tied to worrying about how they would survive – financially – after paying all of the astronomical medical bills that my grandmother was accruing.  Not only was he worrying about my grandmother’s survival in the hospital – but as the medical professionals detailed the months of rehabilitation that would be necessary IF she survived… he was internalizing the question, “How can I pay for all of this??  We will lose everything – the house, our savings… everything.”

Now, my grandfather retired twenty years ago from a company that provided him retiree health benefits – so, in his mind, he didn’t have Medicare.  Up to this moment, most of their medical bills were reasonable, so he had always had some sort of a co-pay or cost-share that had to come out of his pocket whenever they went to the doctor.  The co-pays were not particularly significant - $25 here, $50 there, and $100 once in a while as they experienced minor aches and pains and so on.  In fact, I’m not even sure that he analyzed the medical bills closely – seeing the “insurance discounts” that were outlined on the bill, and seeing the amounts that the insurance covered. In his mind, he just paid whatever the bill said for him to pay in the “Pay this amount” box, and that was that.  However, knowing that within only a few days my grandmother’s medical bills were already well into the hundreds of thousands of dollars, he assumed that the insurance had “run out” and he would be left with the responsibility to pay for the remainder of the bills.

A quick examination of his health insurance card – which was issued by a major health insurance company, quickly resolved the issue – at least in my mind.  In the upper right corner of the card was printed, in small black letters, the words “Medicare PPO.”  From my experience in the financial services industry, I immediately knew that my grandparents were covered by Medicare Plan C – a subcontracted health insurance scheme that not only complies with Medicare, but also provides the coverage of Medicare Plan A, Plan B, and a Medicare Supplement – all in one.  He had a superb plan of coverage, with reasonable co-pays, and a maximum out of pocket cost of $1500 annually, which he could easily afford.  A quick phone call to the insurance company, some pointed questions with him on the line, and drawing a diagram on a piece of paper showing the deductible, co-pays, and maximum out of pocket cost on a linear scale,  set his mind at ease.  After a few moments, he realized that he would not lose their life savings and their house trying to pay for the medical care that might be able to save my grandmother’s life.   With those worries entirely wiped away, he was able to concentrate ONLY on being there for my grandmother and being fully present – for better or worse – in the final days of her life.  I could literally see the relief in his face, and the burden of worry lift from his shoulders.

This experience, however, raised questions in my mind.  For nearly a decade now, my grandfather has struggled with knee pain and it has progressed to the point where he must walk with a cane and can only take very small steps.  This problem has caused pain in his hips and his other knee, and now he is bent over sideways from favoring his left knee.  Was there a time in the past where he could have had a knee replacement, or alternative therapies – that he chose not to receive, because of a fear of the cost?  What about other types of care?  How many activities had my grandparents missed out on because of his physical limitations that could have been corrected – all because they did not maintain their health because of a fear of the cost?  Unfortunately, I may never know the answer.

Seniors are accustomed to paying something for health care or drugs- and may automatically assume that what they are paying is the entire cost – when, in fact, they may be receiving significant discounts with their Medicare, insurance, or prescription drug coverage.  When they hear about the high costs of medical care – they may assume that it is they, and not their insurance, which has to bear the entirety of that cost – and as a result deny themselves care which may eventually cause injury or even death. 

I suppose the moral of the story is for us – as financial advisors – and for everyone who has senior and elderly friends and family for whom we care deeply – not to assume that they fully understand the health care protection that they have.  In my firm, we call this a GLOF – a Gross Leap of Faith that someone understands something which they may not.  The elderly – especially those who grew up in the depression – are generally known for being private people who don’t like to talk about money.  It may take some tactful prying… but it might save a life.  Find out if they understand how their coverages work.  Explore the costs of care with them, and ask “What do you think of that?”  You just might save a life.

RetirementJon Castle