Retired Money: Sticker shock on Healthcare costs for Seniors

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Senior with her caregiver at home

Have you factored rising Healthcare costs into your retirement planning? Here’s my latest MoneySense Retired Money column, which you can access by clicking on the highlighted headline: One huge cost to factor into retirement plans.

That huge cost is of course unexpected medical expenses, which tend to escalate the further along you go in your golden years. Typically, the early years of Retirement (say, in your 60s) are dubbed “Go-Go” years, which are the healthy ones during which you can travel, and medical costs tend to be minimal.

Costs rise as you go from Slow-go to No-go years

But as time goes on, often between the late 60s and early 70s, you can expect a few medical problems to emerge for at least one member of a senior couple, if not both. That’s why they some dub the middle period the “Slow-go” years.

And of course, the last few years is where costs can really mount up: the so-called “No-go” years, especially if you no longer “stay in place” in your home, or require extensive in-home care, or are forced out of the family home altogether to go to a retirement home or nursing home.

The MoneySense piece clarifies what medical and care costs are covered by provincial health plans and what are not. As I note at the top, it’s easy for Canadians to feel complacent about our Universal health coverage, when looking at the furor going on about the Affordable Care Act (aka Obamacare) south of the border. But as the article points out, even in Canada a lot of costs may only be partially covered or may not be covered at all.

The article cites several sources who were speakers at a June conference hosted by Toronto-based TriDelta Financial.  Thus, Healthcare “Navigator” Virginia Miles, owner of Compass Health Care Solutions, said 33% of Canadians are “very concerned” and another 39% are “somewhat concerned” about their ability to meet future healthcare expenses.

What’s NOT covered by Government

Among the long list of items or conditions NOT covered by Government are most dental care, glasses, chiropractic services, naturopaths and other forms of alternative medicine, and some prescription drugs. Those still working may notice many items on this list might be covered by their workplace benefits package but not necessarily once you’re retired (depending on how generous your employer package is for retirees). Included in the limited or partially covered list are nursing homes, home care, physiotherapy, and mobility devices.

TriDelta’s Matthew Ardrey

The article suggests a goodly percentage of retirement nest egg — one TriDelta example mentions a third — may have to be allocated to future health care or long-term care costs. That’s assuming you choose to “self-insure” by dipping into capital. The alternative is to buy Long-term Care Insurance, which gets very costly if you wait till the later “Slow-go” years when it’s more likely you’ll actually need to take the insurer up on its policy.

TriDelta vice president and Wealth Advisor Matthew Ardrey (pictured) says a principal residence can work as a health care buffer, should it prove necessary:  “If they are in a retirement home then they are not in their house. The house will likely at least provide an inflation buffer and if their principal residence, it will be tax free as well.”

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