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Given all the discussion and debate over the future of U.S. health care, is it time to recalculate how much money you will need to pay for medical insurance and related costs in retirement? Here are some numbers to consider. See whether they line up with your expectations.

In 2010, the present value of lifetime benefits from Medicare was about $376,000 for a 65-year-old married couple. Because Medicare covers about half of a beneficiary’s medical costs in retirement, on average, does this mean you’ll need $376,000 to pay for your share?¹

As large as this estimate might seem, there’s evidence to suggest that many people will need even more savings to cover medical expenses in retirement, especially people who don’t expect to retire for at least another decade.

How Certain Do You Want to Be?

The Employee Benefit Research Institute estimates that a man will need between $144,000 and $290,000 and a woman will need between $210,000 and $406,000 in savings to have a 50% chance of affording health care in retirement, assuming retirement at age 65 in 2019.²

These estimates are for the projected median savings needed to pay premiums for Medigap, Medicare Part B and Part D, and out-of-pocket prescription drug expenses. Since half of the population would be above the median, half could need more than these amounts. Some people may need to save even more if they live longer than the average life expectancy, have above-average prescription drug costs, or want greater certainty that they will be able to pay for health care.

The estimates tend to be higher for women because they have longer life expectancies. In fact, a woman who wants to be 90% certain that she will be able to afford her health-care expenses in retirement would need an estimated $370,000 in savings (again, assuming retirement in 2019 at age 65). If her prescription drug costs are above the median, she could need even more.³

You might be wondering whether the health reform legislation that became law in March 2010 will reduce the amount that tomorrow’s retirees will need to pay for health care. Because the law relies on $415 billion in cuts to Medicare, it’s entirely possible that the percentage of medical expenses covered by Medicare benefits could fall in the future.⁴

Of course, your situation is likely to be different. What do these estimates mean if you know that you are almost certain to retire at a different age and/or in a different year? In that case, these numbers might make a good starting point for calculating how much money you may need to accumulate.

1–3) Employee Benefit Research Institute, 2010
4) Tax Foundation, 2010

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2010 Emerald.

KEY PROVISIONS THAT TAKE EFFECT IMMEDIATELY UNDER SENATE BILL AS AMENDED BY RECONCILIATION BILL

Below are some of the key provisions that will take effect immediately, under the legislative package the House passed this weekend (the Senate health bill as amended by the reconciliation bill). The reconciliation bill is based largely on the improvements put forward by the President’s proposal – moving towards the House bill in certain critical areas.

1.
SMALL BUSINESS TAX CREDITS—Offers tax credits to small businesses to make employee coverage more affordable. Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage. Effective beginning for calendar year 2010. (Beginning in 2014, the small business tax credits will cover 50 percent of premiums.)

2.
BEGINS TO CLOSE THE MEDICARE PART D DONUT HOLE—Provides a $250 rebate to Medicare beneficiaries who hit the donut hole in 2010. Effective for calendar year 2010. (Beginning in 2011, institutes a 50% discount on brand?name drugs in the donut hole; also completely closes the donut hole by 2020.)

3.
FREE PREVENTIVE CARE UNDER MEDICARE—Eliminates co?payments for preventive services and exempts preventive services from deductibles under the Medicare program. Effective beginning January 1, 2011.

4.
HELP FOR EARLY RETIREES—Creates a temporary re?insurance program (until the Exchanges are available) to help offset the costs of expensive health claims for employers that provide health benefits for retirees age 55?64. Effective 90 days after enactment

5.
ENDS RESCISSIONS—Bans health plans from dropping people from coverage when they get sick. Effective 6 months after enactment.

6.
NO DISCRIMINATON AGAINST CHILDREN WITH PRE?EXISTING CONDITIONS—Prohibits health plans from denying coverage to children with pre?existing conditions. Effective 6 months after enactment. (Beginning in 2014, this prohibition would apply to all persons.)

7.
BANS LIFETIME LIMITS ON COVERAGE—Prohibits health plans from placing lifetime caps on coverage. Effective 6 months after enactment.

8.
BANS RESTRICTIVE ANNUAL LIMITS ON COVERAGE—Tightly restricts new plans’ use of annual limits to ensure access to needed care. These tight restrictions will be defined by HHS. Effective 6 months after enactment. (Beginning in 2014, the use of any annual limits would be prohibited for all plans.)

9.
FREE PREVENTIVE CARE UNDER NEW PRIVATE PLANS—Requires new private plans to cover preventive services with no co?payments and with preventive services being exempt from deductibles. Effective 6 months after enactment.

10.
NEW, INDEPENDENT APPEALS PROCESS—Ensures consumers in new plans have access to an effective internal and external appeals process to appeal decisions by their health insurance plan. Effective 6 months after enactment.

11.
ENSURING VALUE FOR PREMIUM PAYMENTS—Requires plans in the individual and small group market to spend 80 percent of premium dollars on medical services, and plans in the large group market to spend 85 percent. Insurers that do not meet these thresholds must provide rebates to policyholders. Effective on January 1, 2011.

12.
IMMEDIATE HELP FOR THE UNINSURED UNTIL EXCHANGE IS AVAILABLE (INTERIM HIGH?RISK POOL)—Provides immediate access to insurance for Americans who are uninsured because of a pre?existing condition ? through a temporary high?risk pool. Effective 90 days after enactment.

13.
EXTENDS COVERAGE FOR YOUNG PEOPLE UP TO 26TH BIRTHDAY THROUGH PARENTS’ INSURANCE – Requires health plans to allow young people up to their 26th birthday to remain on their parents’ insurance policy, at the parents’ choice. Effective 6 months after enactment.

14.
COMMUNITY HEALTH CENTERS—Increases funding for Community Health Centers to allow for nearly a doubling of the number of patients seen by the centers over the next 5 years. Effective beginning in fiscal year 2010.

15.
INCREASING NUMBER OF PRIMARY CARE DOCTORS—Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals. Effective beginning in fiscal year 2010.

16.
PROHIBITING DISCRIMINATION BASED ON SALARY—Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees. Effective 6 months after enactment.

17.
HEALTH INSURANCE CONSUMER INFORMATION—Provides aid to states in establishing offices of health insurance consumer assistance in order to help individuals with the filing of complaints and appeals. Effective beginning in FY 2010.

18.
CREATES NEW, VOLUNTARY, PUBLIC LONG?TERM CARE INSURANCE PROGRAM—Creates a long?term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become functionally disabled. Effective on January 1, 2011.

OFFICE OF SPEAKER NANCY PELOSI
MARCH 22, 2010

HOW DEMOCRATIC HEALTH CARE BILLS COMPARE

By RICARDO ALONSO-ZALDIVA

and ERICA WERNER

Associated Press Writers

A comparison of the health care bills before Congress:

The Senate Democratic bill

(Patient Protection and Affordable Care Act):

WHO’S COVERED: About 94 percent of legal residents under age 65 — compared with 83 percent now. Government subsidies to help buy coverage start in 2014.

COST: Coverage provisions cost $848 billion over 10 years.

HOW IT’S PAID FOR: Fees on insurance companies, drugmakers, medical device manufacturers. Medicare payroll tax increased to 1.95 percent on income over $200,000 a year for individuals; $250,000 for couples. New 5 percent tax on elective cosmetic surgery. Cuts to Medicare and Medicaid. Forty percent excise tax on insurance companies, keyed to premiums paid on health care plans costing more than $8,500 annually for individuals and $23,000 for families. Fees for employers whose workers receive government subsidies to help them pay premiums. Fines on people who fail to purchase coverage.

REQUIREMENTS FOR INDIVIDUALS:Almost everyone must get coverage through an employer, on their own or through a government plan. Exemptions for economic hardship. Those who are obligated to buy coverage and refuse to do so would pay a fine starting at $95 in 2014 and rising to $750.

REQUIREMENTS FOR EMPLOYERS: Not required to offer coverage, but companies with more than 50 employees would pay a fee of $750 per employee if the government ends up subsidizing employees’ coverage.

SUBSIDIES: Tax credits for individuals and families likely making up to 400 percent of the federal poverty level, which computes to $88,200 for a family of four. Tax credits for small employers.

BENEFITS PACKAGE: All plans sold to individuals and small businesses would have to cover basic benefits. The government would set four levels of coverage. The least generous would pay an estimated 60 percent of health care costs per year; the most generous would cover an estimated 90 percent.

INSURANCE INDUSTRY RESTRICTIONS: Starting in 2014: no denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age and family size. Starting upon enactment of legislation: children up to age 26 can stay on parents insurance; no lifetime limits on coverage.

GOVERNMENT-RUN PLAN: A new federal insurance plan would be offered to compete against private carriers. The government would negotiate — not dictate — payment rates for medical providers. Unlike the House bill, states could opt out of the plan. It’s not clear the proposal commands enough votes to survive. One compromise under consideration would replace it with national nonprofit health plans administered by the Office of Personnel Management, which oversees the popular Federal Employees Health Benefits Plan.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Self-employed people, uninsured individuals and small businesses could pick a plan offered through new state-based purchasing pools. Would generally encourage employees to keep work-provided coverage.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson’s and other deadly diseases. Drug companies contribute $80 billion over 10 years with the majority of the money used to limit the prescription coverage gap in Medicare.

CHANGES TO MEDICAID: Income eligibility levels likely to be standardized to 133 percent of poverty — $29,327 a year for a family of four — for parents, children and pregnant women. Federal government would pick up the full cost of the expansion during the first three years. States could negotiate with insurers to arrange coverage for people with incomes slightly higher than the cutoff for Medicaid.

LONG-TERM CARE: New voluntary long-term care insurance program would provide a basic benefit designed to help seniors and disabled people avoid going into nursing homes.

ANTITRUST: Amendment expected to be offered on the Senate floor to strip the health insurance industry of its antitrust exemption.

ILLEGAL IMMIGRANTS: Would be barred from receiving government subsidies or using their own money to buy coverage offered by private companies in the exchanges.

ABORTION: Private companies in the exchange could offer abortion coverage, but people would have to use their own money — not federal subsidy money — to buy that coverage. Strict segregation of private from taxpayer funds would be required, and taxpayer dollars could only be used in cases of rape, incest or danger to the mother’s life. The new federal insurance plan also could offer abortion coverage. An amendment by Sen. Ben Nelson, D-Neb., would tighten those restrictions along the lines in the House bill, but the amendment is not expected to pass.

The House bill

(Affordable Health Care for America Act):

WHO’S COVERED: About 96 percent of legal residents under age 65 — compared with 83 percent now. Government subsidies to help buy coverage start in 2013. About one-third of the remaining 18 million people under age 65 left uninsured would be illegal immigrants.

COST:The Congressional Budget Office says the bill’s cost of expanding insurance coverage over 10 years is $1.055 trillion. The net cost is $894 billion, factoring in penalties on individuals and employers who don’t comply with new requirements. That’s under President Barack Obama’s $900 billion goal. However, those figures leave out a variety of new costs in the bill, including increased prescription drug coverage for seniors under Medicare, so the measure may be around $1.2 trillion.

HOW IT’S PAID FOR:$460 billion over the next decade from new income taxes on single people making more than $500,000 a year and couples making more than $1 million. The original House bill taxed individuals making $280,000 a year and couples making more than $350,000, but the threshold was increased in response to lawmakers’ concerns that the taxes would hit too many people and small businesses.

There are also more than $400 billion in cuts to Medicare and Medicaid; a new $20 billion fee on medical device makers; $13 billion from limiting contributions to flexible spending accounts; sizable penalties paid by individuals and employers who don’t obtain coverage; and a mix of other corporate taxes and fees.

REQUIREMENTS FOR INDIVIDUALS: Individuals must have insurance, enforced through a tax penalty of 2.5 percent of income. People can apply for hardship waivers if coverage is unaffordable.

REQUIREMENTS FOR EMPLOYERS: Employers must provide insurance to their employees or pay a penalty of 8 percent of payroll. Companies with payrolls under $500,000 annually are exempt — a change from the original $250,000 level to accommodate concerns of moderate Democrats — and the penalty is phased in for companies with payrolls between $500,000 and $750,000.

Small businesses — those with 10 or fewer workers — get tax credits to help them provide coverage.

SUBSIDIES: Individuals and families with annual income up to 400 percent of poverty level, or $88,000 for a family of four, would get sliding-scale subsidies to help them buy coverage. The subsidies would begin in 2013.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Beginning in 2013, through a new Health Insurance Exchange open to individuals and, initially, small employers. It could be expanded to large employers over time. States could opt to operate their own exchanges in place of the national exchange if they follow federal rules.

BENEFITS PACKAGE: A committee would recommend a so-called essential benefits package including preventive services. Out-of-pocket costs would be capped. The new benefit package would be the basic benefit package offered in the exchange.

INSURANCE INDUSTRY RESTRICTIONS: Starting in 2013, no denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age.

GOVERNMENT-RUN PLAN: A new public plan available through the insurance exchanges would be set up and run by the health and human services secretary. Democrats originally designed the plan to pay Medicare rates plus 5 percent to doctors. But the final version — preferred by moderate lawmakers — would let the HHS secretary negotiate rates with providers.

CHANGES TO MEDICAID: The federal-state insurance program for the poor would be expanded to cover all individuals under age 65 with incomes up to 150 percent of the federal poverty level, which is $33,075 per year for a family of four. The federal government would pick up the full cost of the expansion in 2013 and 2014; thereafter the federal government would pay 91 percent and states would pay 9 percent.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson’s and other deadly diseases. Phases out the gap in Medicare prescription drug coverage by 2019. Requires the HHS secretary to negotiate drug prices on behalf of Medicare beneficiaries.

LONG-TERM CARE: New voluntary long-term care insurance program would provide a basic benefit designed to help seniors and disabled people avoid going into nursing homes.

ANTITRUST:Would strip the health insurance industry of a long-standing exemption from antitrust laws covering market allocation, price-fixing and bid rigging. The bill also would give the Federal Trade Commission authority to look into the health insurance industry at its own initiative.

ILLEGAL IMMIGRANTS: Would be barred from receiving government subsidies but permitted to use their own money to buy coverage offered by private companies in the exchange.

ABORTION: Private companies in the exchange could not offer plans covering abortion if those plans received federal subsidy money. Most plans in the exchange would be affected, because most consumers in the exchange would be using federal subsidy money to buy coverage. The new government plan could not offer abortion coverage. Insurance companies would be permitted to offer supplemental abortion coverage in separate plans that people could buy with their own money. Use of federal money for abortion coverage would be limited to cases of rape, incest or danger to the woman’s life.

I was sitting down in my office with my webmaster “Amir” discussing putting together a video regarding the Controversial Obama Health Care where he suddenly, out of the blue, stuck a video cam in my face and recorded our conversation!

I wanted to have a professional video made but he insisted that it is better to just roll with this unrehearsed version! Reluctantly I agreed and trusted him to not make a fool out of me!

Please watch the 5 minute short video and also download the entire Proposed Health Care Reform plan via the link I have provided for you below.  Please let me know what you think and share your thoughts with everyone else on this subject in the comment area below.

To see the complete proposed plan, please click here and download the 1,100 page document.

Think that insurers are what make coverage so expensive? Think Canadians have it better or that your company’s plan is the cheapest for you? Think again.

Hearsay and bad information often fuel people’s misunderstandings of health insurance. When was the last time someone snuggled up with a cup of coffee and her insurance policy?

According to the Life and Health Insurance Foundation for Education and the Henry J. Kaiser Family Foundation, the following myths are alive and well in the minds of most folks.

1. It’s cheapest to buy health insurance through an employer’s group plan.

If your employer offers a group health plan, you’re likely experiencing annual increases in premiums, reductions in what’s paid for by your employer, increases in your out-of-pocket expenses and the possibility that you’re paying for lots of benefits you don’t want or need.

An individual health plan (the kind you buy on your own), especially for someone who’s healthy and young, can offer significant savings. Unlike individual plans, group health plans must abide by state health insurance mandates, which can require coverage for everything from autism to hearing aids and from contraceptives to in vitro fertilization.

Although an individual health plan can deny your application based on your health status, Matt Tassey, a spokesman for LIFE, notes that if you’re eligible the plan can be customized to meet your specific health care needs.

“If you’re a man, you have no need to see an obstetrician. But if they have an employer-sponsored health plan, they are still paying for (the obstetrics coverage),” he says.

2. Health insurance is expensive because health insurance companies are driven by profit.

Brenda Weigel, a spokeswoman for the National Association of Health Underwriters, says this is a common misconception. “The fact that health insurance is expensive is because health care is expensive. Or there’s the common misconception that Medicare administrative costs are lower than private plans, when in fact there is quite a bit of cost-shifting,” says Weigel.

When patients use a government insurance program (such as Medicare), providers of health care shift more costs to people who have insurance. The result is higher premiums for people who purchase their insurance on the individual market and workers who receive insurance through their employers.

Tassey notes that rising prescription drug costs also fuel increases.

3. If you’re young and healthy you don’t need to pay for health insurance.

Then what happens when you break your leg in a snowboarding accident or blow out your knee while playing soccer? If you find that your tonsils need to be removed, the cost of a tonsillectomy can start at $5,000, with an additional $1,500 per day for an overnight hospital stay.

“There is this idea that if they need to be hospitalized they can just go to the emergency room because they have to take you,” says Tassey. “We like to call them ‘young immortals.’ A problem arises when they have to be stabilized or, worse, have to stay in the hospital for an extended period of time. What happens if they have to be transferred somewhere else for care or have to see a specialist? The cost could reach $100,000 once you add everything up, and starting out their lives in serious medical debt can have a long-term repercussions on their financial future.”

Tassey says young people rarely think about health insurance until it’s time to have a baby.

4. The highest numbers of uninsured people are under age 25.

The fastest-growing group of uninsured Americans is age 50 to 64. The difference between the younger and older people is accessibility to health insurance. While younger people who are not covered by an employer’s health plan may find it easy to acquire affordable individual coverage on their own because of age and health status, older people do not have the same advantage.

According to recent estimates from the Kaiser Commission on Medicaid and the Uninsured, middle-aged and older adults under age 65 (and not yet eligible for Medicare) are fast becoming the largest group of Americans without health insurance.

In fact, 19 million Americans from age 50 to 64 were uninsured or underinsured in 2008. Members of this group are more likely to arrive at a doctor’s office with a number of chronic medical conditions, making it difficult or impossible for them to buy individual health insurance. As baby boomers reach age 65, the sheer number of people in need of coverage has the potential of overwhelming the Medicare system.

“This is a serious problem as the baby boomers age and the cost of health care skyrockets. If you drive an old car, you have to do repairs to keep that car moving. Just imagine having 75 million old cars coming into the Medicare system — that is exactly what we are looking at in the next several years,” says Tassey.

5. COBRA is very expensive, and a short-term health plan would be cheaper.

The federal COBRA law allows you to continue buying your former employer’s group health plan if you are laid off. The catch is that the employer no longer has to contribute to the premiums. One alternative is buying a short-term health plan on your own.

If you are relatively healthy, a short-term plan could bridge the gap between other insurance plans, but if you have a pre-existing condition, or need maternity care or prescription drug coverage, you may not be able to find a short-term plan.

Also, short-term plans generally require you pay high deductibles before coverage begins. This deductible can vary from $250 (for very healthy policyholders) to well into the thousands. When you consider the cost of meeting the deductible before the plan pays for medical care, COBRA may be the better choice, especially if you have a pre-existing condition. In addition, a typical short-term policy lasts a maximum of six months, and the insurer is not obligated to renew your policy.

Under the American Recovery and Reinvestment Act that went into effect in February, you can receive a 65% subsidy of your COBRA premiums for up to nine months. In return, the federal government reimburses the employer with a payroll tax credit.

6. Large employers always offer health insurance to workers.

The Kaiser Family Foundation points out that one in five workers in firms with 500 or more employees is uninsured because many companies do not offer health insurance.

When workers are offered health insurance, they take it. According to the Employee Benefits Research Institute, less than 5% of those workers who are eligible for health benefits is uninsured.

7. Canada has a better health care system than the U.S.

The debate rages on. Canada’s universal care system is fine, but there’s a limit on what you can get. For example, if you happen to be a Canadian age 70 or older and need bypass surgery, the government won’t pay for it.

“Universal health care isn’t better; it’s just different,” Tassey says. “One of the largest hospitals in the U.S. is the Henry Ford Hospital in Detroit. Many Canadians come over to Detroit for care — not because it’s better; it’s because they can get it (in the U.S.). There is no rationing (in America) of any sort, so they can just write a check.”

Americans may complain about the high cost of health care in the U.S., but Tassey points out that people are rarely denied care for any reason.

“People in the U.S. demand care and demand it immediately. They also think we can cure anything,” notes Tassey. “Unfortunately, it costs a lot of money to treat the number of fatal diseases that need a cure. We already have a semi-Canadian system for those who are 65 and older — it’s called Medicare, and it’s going bankrupt.”

This article was reported by Michelle Matlock for Insure.com