Financing Sources of Long-Term Medical Care for Seniors Nearing Retirement

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Table of Contents

Introduction
Private Insurance
Reverse Mortgage
Medicare Supplementary Insurance
References

Introduction

In the case of public health programs, there is the need for depending on several sources of funding for taking care of the long-term medical needs of people especially elderly people nearing retirement. This becomes essential since most of the social insurance programs cover people within a specified income range. Some of the sources which can be used for funding the long-term medical needs of senior citizens are discussed in this paper.

Private Insurance

A large number of Americans depend on long-term care insurance. Elderly people might be able to buy at least long-term insurance coverage. Although the senior people nearing retirement in the middle-income group cannot afford to buy the most comprehensive insurance plans, many of the private insurance carriers offer a number of variants with the best possible benefit combinations. When the senior person is able to specify the amount, he/she can afford to pay as premiums, the agent can arrive at an acceptable price by adjusting the policy design. However, it is not possible to identify the important policy features readily and it needs a complete analysis of the different options available. However, it must be noted that any change in the environment like modifications in the Medicare policies or the introduction of other new public funding programs may make the policy obsolete. These changes may overlap with the coverage under the long-term insurance policy procured by the individuals. This implies that the policy bought today might lose its value in the future or might fail to provide access to newly emerging service facilities. Stand-alone insurance products may become handy and may prove to be a sensible investment option (Merlis, 2005).

Reverse Mortgage

Home equity is one of the available sources of funding for long-term care for senior people nearing retirement. Under a reverse mortgage, the lender advances to an elderly person against a future claim on the home. Even though this practice has not become popular, some of the state’s borrowers have presumably been using the proceeds to pay long-term health care needs. One disadvantage with a reverse mortgage is that this method is costly and in extreme emergent situations people can avail the funds for immediate use (Merlis, 2004).

A reverse mortgage is an improved type of loan. Under this facility, the seniors are given the option of receiving the money in different forms. The elderly people can receive the benefits as a lump sum payment. They can also avail the facility of receiving fixed monthly payments for up to life. They may also opt for a line of credit or a combination of a line of credit and monthly payments. Most people choose the line of credit which allows the borrower to utilize the funds as and when necessary. Virtually any individual of more than 62 years old can qualify for getting the reverse mortgage (Day).

Medicare Supplementary Insurance

Private insurance companies sell Medicare supplemental insurance policies to fill up the gap in the Original Medicare coverage. These policies provide for additional coverage of expenses that are not provided for by regular Medicare plans. Such expenses include co-payments, deductibles and coinsurance. Medicare supplementary policies provide benefits beyond the level provided for by the Medicare plans which are in practice. This type of insurance coverage is also referred to as Medigap insurance. Under the Medigap policy, the beneficiary can avail of all the general benefits applicable for the healthcare coverage. These benefits are available as prescribed under the law without regard to the insurance company which has sold the policies (Economywatch).

References

Day, T. (n.d.). About Retirement Care Communities. Web.
Economywartch. (n.d.). Medicare Supplement Insurance.
Merlis, M. (2004). Long Term Care Financing: Models and Issues.
Merlis, M. (2005). Private Long-Term Care Insurance: Who Should Buy It and What Should They Buy?

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Financing Sources of Long-Term Medical Care for Seniors Nearing Retirement

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