Planning for Medicare – Critical Considerations for the 3 Stages of Retirement

If you fail to plan, you are planning to fail

-Benjamin Franklin

Planning for Medicare – What Stage Are You In?

Medicare is a huge benefit program covering over 90 million people (60 million Seniors) and a gross budget over $919 last year. It is a program with multiple parts that allows beneficiaries to make a lot of choices to tailor their individual benefits to meet their needs. For most Americans, you have paid into the system your entire working life, and now you get a chance to relax, travel, learn, play, or just spend more time with your grandchildren. And Medicare will be there for you when and how you need it. But you take the time to plan for your needs at the beginning and periodically as your needs (and resources) change.

What stage of retirement are you in? A friend of mine has a humorous breakdown of the three stages of retirement that is handy when planning for medicare.

The Go-Go Years

1. For many people, retirement is the chance to “go out and play” just like their mother told them. It is roughly ages 65-75 and is normally limited by health and finances. Based on an “apples-to-apples” life expectancy, a 65 year old person today is equivalent to a 58 year old in 1970, and a 75 year old today is like a 65 year old from 1970 (see my next blog How Old Are You?). My wife and I are in this stage, and we are finally able to travel, bike, ski, hike, and dive as much as we want – subject to limitations (in my case) imposed by arthritis and gradual macular degeneration. I have clear needs from Medicare in 3 key areas:
   1. Coverage: I want maximum coverage, so I have a Medicare Supplement (see my upcoming blog, Medicare- Coverage Considerations). I picked a Part G plan, because it provides terrific coverage for expenses above and beyond what Medicare covers and includes emergency coverage outside the US for trips up to 60 days, in amounts up to $50,000.
   2. Choice: I want to access the best physicians available for my medical needs. I enjoy travel and have no problem going to centers of excellence for care – but I want access to the best if it is required.
   3. Flexibility: I want to spend more time away from home skiing and want access to regular medical care regardless of venue. I don’t want to be tied to a narrow network and really appreciate the emergency coverage outside the US.

The Slow-Go Years

1. Sticking with the actuarial methodology, Americans today reach “elderly” status about the age of 75-78 (men vs. women). Technically, this is when mortality probability reaches over 2% per year, but from a practical perspective, it is when it makes sense to slow down, travel less and smell the roses (or coffee). For most Medicare beneficiaries, key considerations in this period include:
   1. Coverage of Services: For many folks access to additional services like dental and hearing makes Medicare Advantage Plans desirable. Additional services such as meals and transportation may be very important as well.
   2. Density of Network: Having a deep and capable network of provides is key in this phase. Managed care should mean great care, and that starts with the network.
   3. Cost: For many people cost becomes an increasingly important consideration as utilization of services increases and retirement savings are slowly depleted.

The No-Go Years

1. The Census Bureau has defined 85+ as very old according to some of their publications. This is when the annual mortality probability exceeds 10%, and travel becomes difficult for many people. Over 50% of nursing home residents are over 85, and 70% of the people over the age of 65 will need some nursing home support. Key considerations in this period include:
   1. Access to managed care: For older Seniors, having an integrated approach to care can dramatically improve care and reduce costs.
   2. Excellent drug coverage: Almost all Seniors in this group have multiple medications, and the cost and availability of those drugs is a critical consideration.
   3. Integration with home or nursing care: Integrated care and excellent planning that includes family members as desired are critical considerations.

It pays to consider where you are in retirement when you decide what type of Medicare coverage you need going forwards. Work with your planner through a needs assessment that really looks at where you are in your life, and what you see as needs going forward. Everyone has unique needs and circumstances. Fortunately, Medicare offers a wide range of alternatives to its beneficiaries. Take your time, look forward- not back – and choose wisely, and have fun.