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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Long term health care planning

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: I will be retiring in a few months and I just want to make sure that I have my finances in order. I have access to group health insurance through my wife until I become eligible for Medicare. Should I consider supplemental coverage now or when I become eligible for Medicare.

A: It clearly makes sense to take care of your long term health care insurance now rather than wait. Medicare does not cover the largest medical costs that usually accumulate in the final years of life and these can become a financial burden to a younger surviving spouse. According to the American Association for Long-Term Care Insurance (AALTCI), many people wait to buy insurance simply because they do not realize that coverage is more affordable before retirement age. By the time they do seriously consider it, their health has deteriorated to the point where insurance is very expensive. There are two ways to cover the cost: either a lump sum or in annual payments. The advantage of the lump sum approach is that your wife gets the money back if you do not need the funds for your own care. Also, there is a psychological advantage to knowing that some retirement funds have already been segregated for health costs so you feel more comfortable spending the rest for living expenses. There may also be some tax advantages as well. Either way the total lifetime cost is lower by doing it now. For purposes of general planning, if you are in good health now then estimate that a lump sum cost might be about $40,000 and an annual payment policy might be about $800 per year. That seems like little for the assurance that the majority of your lifetime health care costs will be covered. Prices from all of the major insurance companies are available on a side-by-side comparison at Once you narrow down the decision, then decide whether you are comfortable enrolling online service or with the help of an agent.


More resources: Long Tem Care