Originally Posted by
Andy
The reality of retirement medical costs is that they are large and getting bigger. We (wife, I) have Tricare and we will have to pay medicare Part B when we retire (Medicare Part B is required for Tricare at 65). Based on 2017 Part B rates, I'll have to pay $428.60/mo for at least two years (I plan on converting all taxable 401k money to Roth after I retire which will extend that cost for a few more years) and will eventually drop down to $187.50/mo x 2 (wife, me) when my wife retires.
https://www.medicare.gov/your-medica...t-b-costs.html
If you or your spouse ends up in a nursing home, your VEBA will evaporate very quickly.
Regarding nursing homes most of the use of VEBA funds is for pay as-you-go medical expenses like premiums, copay, care. There seems to be a fairly significant exception here with a Continuing Care Retirement Community with the "til death" capability where if (when) you get terminally sick, they provide health care to the end. If this cost is broken out separately in the contract the IRS seems to permit VEBA used as future health care in a lump sum. I would think this cost would be quite high and in this case a lot of VEBA would be quite beneficial. Mom and M-in-L both used these types of facilities. Once in, they can stay without having to change facilities.
https://www.aarp.org/caregiving/basi...mmunities.html
"The most expensive of all long-term-care options, CCRCs require a hefty entrance fee as well as monthly charges. Entrance fees can range from $100,000 to $1 million — an upfront sum to prepay for care as well as to provide the facility money to operate. Monthly charges can range from $3,000 to $5,000, but may increase as needs change. These fees are dependent on a variety of factors including the health of your loved one(s), the type of housing they choose, whether they rent or buy, the number of residents living in the facility and the type of service contract. Additional fees may be incurred for other options including housekeeping, meal service, transportation and social activities.
There are three basic types of contracts for CCRCs:
- Life Care or Extended Contract: This is the most expensive option, but offers unlimited assisted living, medical treatment and skilled nursing care without additional charges.
- Modified Contract: This contract offers a set of services provided for a set length of time. When that time is expired, other services can be obtained, but for higher monthly fees.
- Fee-for-Service Contract: The initial enrollment fee may be lower, but assisted living and skilled nursing will be paid for at their market rates."
https://www.irs.gov/pub/irs-pdf/p502.pdf
"Lifetime Care—Advance Payments
You can include in medical expenses a part of a
life-care fee or “founder's fee” you pay either monthly or
as a lump sum under an agreement with a retirement home. The part of the payment you include is the amount properly allocable to medical care. The agreement must require that you pay a specific fee as a condition for the home's promise to provide lifetime care that includes medical care. You can use a statement from the retirement home to prove the amount properly allocable to medical care. The statement must be based either on the home's prior experience or on information from a comparable home.
Dependents with disabilities. You can include in medical expenses advance payments to a private institution for lifetime care, treatment, and training of your physically or mentally impaired child upon your death or when you become unable to provide care. The payments must be a condition for the institution's future acceptance of your child and must not be refundable.
Payments for future medical care.
Generally, you can't include in medical expenses current payments for medical care (including medical insurance) to be provided substantially
beyond the end of the year. This rule doesn't apply in situations where the future care is purchased in connection with obtaining lifetime care of the type described earlier."