Many seniors receive group health insurance coverage from their spouse’s retirement plan. What many seniors don’t realize is that losing one’s spouse can also mean losing that group health insurance coverage. For seniors on a fixed income, the additional health insurance premium can be an unpleasant surprise. This article from AARP explains that there are several options when group health coverage is lost. First, check into COBRA coverage. It might be possible to extend the less expensive group policy that was available under your spouse’s employer. Second, your rights under HIPAA may allow you to continue coverage from one group policy to the next. Third, it may be that you belong to an organization of some kind that will allow you to get group coverage, such as a local chamber of commerce. If all else fails, you may need to get individual coverage. Be sure to check all of your options and to speak with an insurance agent that you trust.

The loss of group coverage for health insurance could have a significant impact on your cash-flow and monthly budgeting in retirement. Your estate plan should take into account the possible need for individual health coverage in the future and the anticipated costs of meeting that need.

Several reforms to Michigan’s Blue Cross Health Insurance are currently pending in the Michigan Legislature. Proponents hope that these reforms will help reduce the costs of health care in Michigan, while advocates for the health insurance industry voice concerns about declining revenues and increased costs. The issues are complicated, but it seems fair to say that health care is only getting more expensive as the system continues to absorb the shock of a growing retiree population. The system is further strained here in Michigan by increased demands for individual coverage, a demographic that provides financial difficulties for insurers because of the disproportionate number of high-risk cases. Employment based coverage provides greater opportunity for insurance companies to manage risk because the varied population is more likely to include healthy individuals who opt for coverage because it is paid for at least in part by the employer. The key is of course sustaining the highest quality of care for the greatest number of people. As noted in Crain’s Detroit Business:

“Throughout the process one point has become clear, that more and more people are finding themselves in need of individual coverage, but the system does little to help them. As the bills go back to the House, we are hopeful that there will be meaningful solutions on this important issue,” Blue Cross said.

Blue Cross officials have said the individual market needs new rules to accommodate a growing number of people expected to join it over the next five years. The Blues argued for the high-risk insurance pool, which would require assessments from competing insurers after two years.

The push and pull of the legislative process is a reasonable mechanism for working out these controversial and complex topics. There is no easy solution to the pressure that health care costs place on the economy as a whole or the individual retiree’s monthly budget. The key is to remain informed and involved in the process.

In my practice I have all too often I found evidence that my elderly clients have been victims of financial abuse in one way or another. This story shows just how common the phenomenon is:

Motivated by the high interest rates and the fear that Jeannetta, at least, might outlive their savings, the Mounceys drained their bank accounts and invested $135,000.

“With Jack being so sick, we wanted to make sure we had decent income, because I couldn’t afford our house on my own,” said Jeannetta Mouncey, 64.

Less than a year later, though, the interest checks had stopped and much of the Sarasota couple’s money was unaccounted for. Their First Liberty sales agent, Fred Howard, had disappeared. Eventually, the company went dark, too, its president locked up in an Arizona prison on securities fraud charges.

And here in Michigan, similar concerns abound:

Abuse of elderly people, even by their own children, has become the fastest-growing crime in Wayne County and the nation, and the problem will only worsen as baby boomers age, officials said Wednesday. The world is full of dangerous people of all kinds. Of those victimizing the elderly, some are predators and some are merely negligent. The elderly are particularly susceptible to manipulation and misinformation. And with significant accumulated assets for retirement, they are logical targets.

A few thoughts come to mind on how seniors can protect themselves. First, as a general rule, seniors have a very low risk tolerance because they depend on their assets and have little chance to recoup losses. Investments with high rates of return only come with increased risk. That is not to say that annuities, often pitched as minimal risk investments, are an easy solution. See here for more information on complications with annuities.

Investments pose a significant risk of loss in many cases, both from the failure of investment company and from the failure to comply with the extensive regulations regarding Medicaid long term assistance. Significant financial decisions should be made after consulting not only with a financial planner, but also an elder law attorney and perhaps even an accountant. There are too many risks not to proceed with caution and impartial advice.

This article provides some preliminary answers to an important question for today’s retirees and elderly: Is long term care insurance a good idea?

In general, I advise clients to get long term care insurance. The effects of being unprepared for this financial tsunami are too overwhelming to do otherwise. But be careful and be informed.

Among your first questions should be the extent of the coverage and the anticipated premium schedule. It is not uncommon to see nursing home care costs increase 10% or more in a single year. It is therefore important to understand how much coverage is needed and how much adequate coverage will cost.

Once you have that information, consider this: a properly drafted and funded asset protection plan will give you all of the benefits of your assets, but fully protect them from the cost of long term care after five years. When you look at the premiums, the escalation of long term care costs, and the uncertainty of the future, an asset protection estate plan combined with 5 years of long term care insurance makes the most sense for many people.