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Jim Lentini: Health care financing

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Posted: January 5, 2009 5:41 p.m.
Updated: January 6, 2009 4:55 a.m.
If you are concerned about the rising cost of health care and what its escalating cost will do to your retirement plans, you are not alone.

Most of us are aware of the continued rising costs, projections of future service costs and other factors that contribute to rising health care expenses.

Amid all these reports and projections, following are some steps to stay covered without siphoning a large portion of your retirement assets.

n Health savings accounts: If you favor a PPO plan and are healthy and can afford a larger deductible, you can save premium with a high-deductible health plan (HDHP). You pay a higher deductible, but enjoy significantly lower premiums, while still being covered for catastrophic illness or accident. Then, if you have an HSA compatible plan, you can open a Health Savings Account (HSA), which is a tax-advantaged investment account that allows you to pay health care costs up to your deductible with pretax dollars.

n COBRA: If you have group insurance, COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) allows workers to continue the coverage they have had for up to 18 months after they stop working. (Selecting a higher deductible plan can help lower your monthly premium).

n Medigap: When you are eligible for Medicare, you will have reduced premium costs from the medical costs prior to age 65. But you will still need to cover those costs not covered by Medicare, such as deductibles and copays. To offset these costs, a Medicare Supplemental Insurance Plan, or "Medigap" coverage, helps cover costs from skilled nursing to prescription drugs. You choose the coverage that fits your needs and budget.

n Long-Term Care & Disability Insurance: This coverage provides for home care, nursing home and services when you cannot perform activities of daily living. Long-term care is not covered by Medicare and Medigap policies. In addition to a long-term care insurance, you should have disability insurance that provides income when you are disabled and no longer able to work.

Your health care decisions come down to matching your options to your needs and overall financial situation. The options mentioned above should be discussed with your financial advisor who can help you evaluate what's best for your situation. This way, working together, you can plan ahead and adjust your long-term financial strategy to a sound and fulfilling retirement.

Jim Lentini is president of Lentini Insurance & Investments Inc. in Santa Clarita. His column reflects his own views and not necessarily those of The Signal.


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