Retirees face huge costs for health care

ON THE MONEY

Your Money

March 19, 2006|By GAIL MARKSJARVIS | GAIL MARKSJARVIS,TRIBUNE MEDIA SEVICES

You recently wrote that health insurance in retirement might cost about $200,000. Won't Medicare cover those costs?

- R.B. via the Internet

A lot of people assume Medicare covers all health care costs in retirement. They also assume their employers will be helping out with insurance.

Neither is true. Only about 11 percent of companies provide any health insurance to employees after they retire, and most that do are looking at cutting the benefit. Absent a union contract, that's usually fairly easy to do.

And Medicare does not cover all medical costs. There can be sizable deductibles, and some care isn't covered at all. Many seniors buy supplemental insurance to pick up where Medicare leaves off. Premiums for that run about $150 a month to $300 a month per person, depending on the state where you live.

There is drug coverage, too. You might have heard that there is new prescription drug coverage free to seniors. But it's not entirely free: Retirees still pay part of the cost. By some estimates, that will average about $900 a year.

The $202,000 health insurance cost you are referring to is an estimate created by Paul Fronstin, a researcher for the Employee Benefit Research Institute.

Fronstin looked at health care costs rising 7 percent to 10 percent a year, and calculated what health insurance - including drug coverage - would cost retirees throughout retirement. For a person retiring in 2014 it would be $202,000 if he lived to 80.

Yet financial planners currently are advising people to consider having enough money to cover expenses to age 90 or 100. Fronstin estimates that if you retire in 2014 and live to 90, you will need $381,000 in savings simply for health insurance.

Figuring out how long you will live in retirement is difficult, but if your parents have lived into their late 70s or 80s, you might assume a lengthy retirement for yourself. You could try the life expectancy calculator at www.livingto- 100.com.

Is there anywhere that I can turn for possible scholarship funding for the disabled? My son has a neurological problem, and I'd like to be able to give him the very best education possible. My husband and I are divorced, and I'm getting zero child support.

- K.K., via the Internet

For a wide variety of scholarships, including those for disabled people, search the Internet site FastWeb (www.fastweb.com). On this site you can indicate qualities or talents of students and the database provides a list of possible scholarships.

Also, FinAid.com has a section on disabilities and provides vocational resources. Scholarships often come and go. But the site's director, Mark Kantrowitz, suggested these possible sources: the HEATH Resource Center, Tourism Cares for Tomorrow, the Incight Go-Getter Scholarship (www.incight.org), Patient Advocate Foundation (www.patientadvocate.org), Special People in Need scholarship, and the Yes I Can! Foundation for Exceptional Children (yesican.sped.org).

For the Special People scholarship, you must be nominated by a school.

gmarksjarvis@tribune.com

Messages for Gail MarksJarvis also can be left at 312-222- 4264.

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