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The Future Of Medicare: Why You Should Be Worried

Amanda C. Haury

Medicare is a federal health program offered to senior citizens and disabled Americans that provides health benefits and eases the cost of medical services. Although many take the program for granted, Medicare's future is not guaranteed. With the rising cost of healthcare and reduced governmental funding, the future of Medicare is hazy at best. Here is a look at why today's generation of professionals should be worried about the fate of Medicare, and what will happen if the program falls before they become eligible for benefits.

SEE: Investing In The Healthcare Sector

The Benefits of Medicare
Medicare offers medical coverage to groups of people that are known for having a lot of medical expenses, and often times do not have the financial means to keep up with the rising medical costs. It covers a broad range of medical services that many people would not be able to afford to pay. While the service that Medicare provides does not cover 100% of the costs, it can significantly help ease the sting of medical bills. Although Medicare has a high deductible that many seniors complain about, it does cover 80% of the allowable amount after the deductible. This helps to offset high the medical costs for seniors and the disabled when they need it the most. Without Medicare, these citizens can expect to pay a great deal more for their healthcare services.

What Would Happen if the Medicare Program was Terminated?
If the Medicare program was terminated, the financial situations of high risk groups such as the elderly and the disabled would significantly worsen. Seniors and disabled citizens would be forced to find health coverage elsewhere, and that may not be possible due to pre-existing condition clauses that are in place with many major insurance carriers. Additionally, premium costs could sky rocket because many insurance programs charge based on age-banding rules.

Expect Even Higher out of Pocket Costs
The death of Medicare would mean an increase in the financial burden on senior citizens and the disabled. Medical costs would skyrocket for these groups and there is no guarantee that they will be able to find a health insurance carrier to cover them without a waiting period. Even though the deductible for Medicare is high, the medical services that it covers are even higher. If the recipient is able to find an insurance carrier willing to cover them without a waiting period, they can expect to have their mouth drop in shock when they see the premium costs. An unfortunate truth is that individual coverage for senior citizens and disabled patients is nothing short of outrageous. In order to offset these high costs, a bit of financial planning is in order.

Why the Younger Generations Should Worry
Although retirement may seem like a long way off, it takes a lifetime to save up for a hearty retirement fund. If Medicare ceased to exist, you may need to save up even more money for your future retirement. In order to save up enough money for retirement, you would need to take full advantage of your 401(k), pension plans and retirement savings plans in order to optimize your retirement savings. The safety nets that older generations have come to depend on may not be around when you need them most.

The Bottom Line
Medicare protects the finances of senior citizens and the disabled by offsetting high medical costs that are common among these groups. The end of such an important program that helps support the people who need healthcare the most, would leave many of the same people in a very difficult financial predicament. With the future of Medicare being uncertain, it is never too early for younger generations to start saving up for their retirement. By the time the class of 2012 reaches retirement age, there is no guarantee that federal plans such as Medicare will still be in existence.



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