While the aging process is a subject that most of us would certainly rather shy away from, it is a subject that will affect the majority of us. As you are likely already aware, life expectancy has increased substantially over the last century. However according to the CDC, the leading cause of death and disability in the United States is due to chronic diseases. As defined by the U.S. National Center for Health Statistics, a chronic disease lasts for three months or longer. Common types of chronic diseases and conditions are listed, below:
- ALS (Lou Gehrig’s disease)
- Alzheimer’s disease and/or dementias
- Arthritis
- Asthma
- Cancer
- Chronic obstructive pulmonary disease (COPD)
- Cystic fibrosis
- Diabetes
- Heart disease (example – congestive heart failure)
- Obesity
- Osteoporosis
My work with the public for the last twenty-seven years in the areas of life and money has allowed me to experience firsthand the challenges many of us will face as we age. While chronic illnesses are emotionally difficult to endure for individuals, families and friends, it can also be very financially difficult due to the emotional uncertainty about the financial resources required to provide quality care for our loved ones.
If a person becomes afflicted with a chronic illness at age sixty-five or older, the Department of Health and Human Services, Centers for Medicare & Medicaid Services, and Chronic Care Management Services are very specific in what services will be covered and/or reimbursed.
The challenge facing the United States today is the aging of the baby boomers (born between 1946 and 1964). By some estimates, the boomer population is over 75 million. As this population continues to age, the increased medical demands will create a significant burden on the government entitlement programs, namely Medicare and Medicaid.
Just for clarity, Medicare is the federal health insurance program for people who are age sixty-five and older or those under the age of sixty-five who have been declared disabled by the courts. In contrast, Medicaid is a jointly funded, Federal-State health insurance program for low-income and needy people, e.g. welfare.
To qualify for Medicaid, an individual’s financial resources will be assessed. For services related to chronic illnesses, any private expenses are first paid by the individual with any remaining expenses possibly covered by Medicaid. This being the case, anyone with substantial financial resources will be required to cover the expenses of chronic illnesses until they fall below certain threshold levels established by specific State Medicaid requirements.
For those individuals who believe they may be able to game the system by hiding or transferring assets prior to applying for Medicaid benefits, they may want to think twice as the states have adopted a look-back period. For example, the look-back period in the state of Indiana was extended to five years.
Moving forward over the next twenty years, the current health care system that covers the issue of chronic illness is, by all measures, unsustainable. Due to budget constraints, the states will be forced to implement new protective measures to prevent those with financial resources from gaming the system.
For anyone who has created sufficient amounts of investment capital and/or real assets, it would be wise to educate themselves on the cost of healthcare in order to be better positioned for the final stages of life.
