Rising healthcare costs are on most people minds these days because those costs are hitting their bank accounts. Everyone knows that healthcare costs can be outrageous, especially when you have to pay them yourself. Of course, that is the whole premise behind the Affordable Healthcare Act, to bring healthcare costs down. And given the fact that healthcare costs are a major contributor to whether or not a client can afford to retire when they want to, I decide to write a short mini-series on this matter. Make no mistake about it, healthcare costs ARE or WILL BE a factor that will play into your retirement years. Over the next few posts, I’ll share some personal examples of how rising healthcare costs have affected my own family and clients of mine.
I might as well start off with an example from my own recent life. One of our children recently suffered some injuries in a sporting accident. My son was riding a motorcycle and had a pretty ugly crash. Even though he was wearing all the right protective gear like a helmet, neck brace, chest protector, riding boots and gloves, he still got hurt. No one really had a clear view of the entire crash, but the last thing we saw was his feet and legs up in the air as he went behind a dirt jump. When we got to him his chest protector was broken in half and his helmet visor had broken off, and he had a mouthful of dirt, so needless to say we were very worried about him. The first responders were not sure exactly what was wrong with him but were concerned about internal injuries given his broken chest protector and some bruising on his stomach. So here is what ensued after the accident:
- 90 mile ride to the nearest hospital in an ambulance
- One CAT scan
- Two MRI’s
- 3 days of observation in the hospital, during which he could not eat anything. He was fed though and IV the whole time.
- Several follow up visits to a few doctors
The final diagnosis was that my son had a concussion. We were very thankful that it was not worse than it was, but concussions are no joke. It affected him for the next few months at school and at home. He is fully recovered now and is doing fine, and he is not riding motorcycles any more.
The final bill ended up being over $14,000 for the whole thing, not including the final MRI which he had 6 months later. I’m not sure how much of that my health insurance paid out, but I had to pay out my $2,000 deductible, and that was pretty much it for me. Fortunately all of the scans were done in the same calendar year, so one we met the $2,000 deductible our out of pocket costs were pretty minimal.
The doctors that saw him in the hospital never talked about a concussion until at the end of the 3 day stay. They did all these tests and scans to make sure it wasn’t something more severe. So why did a concussion need to cost $14,000 in healthcare costs?
Is it the insurance companies making a profit from what I pay and what they pay the medical providers? Is it because the doctors and nurses that get paid way too much money? Is it the hospital charging an arm and a leg to lay in their bed for 3 days? Is it the fact that an MRI costs about $2500? Is it the $1000 ambulance ride? Is it the attorneys that would help me sue them all if they misdiagnosed something more serious? Or is it our sue-happy society that hires the attorneys to sue in the first place? I’m not sure if you can say that it’s any one of these things alone that is to blame for rising healthcare costs over the years. But the system is definitely broken and needs to be fixed. Obamacare is making an attempt to do that, but I guess time will tell if it actually fixed the system. For now, healthcare costs continue to rise, health insurance premiums continue to rise, and unless you qualify for the tax credits, you will continue to pay out more and more for your healthcare.
As for persons planning to retire before they qualify for Medicare, this is a big issue. Make sure you consult with your financial advisor about how rising healthcare costs will affect your plans for retirement in the near future. You absolutely have to remove the risk of healthcare costs from your picture before you make the decision about retirement. Call us today if you would like to discuss your personal situation and plans for retirement.