Republican plans to cut Medicaid could cause millions to lose coverage, according to the nonpartisan Congressional Budget Office.
Republicans need to cut more than $800 billion in programs, but experts say there is no way to make those cuts without impacting Medicaid.
One of the biggest concerns after retirement is how much medical expenses will be incurred, but many Americans have not yet planned for their medical expenses.
A DA Davidson survey of more than 1,000 adults conducted in February found that nearly eight in 10 Americans (78%) say they are concerned about the impact rising health care costs will have on their retirement. Additionally, 6 in 10 Americans said they know a retiree who is struggling with health care costs. However, research shows that fewer than half (48%) factor these increased costs into their retirement plans.
Because tomorrow is not promised, many Americans who put off plans may face medical emergencies that derail travel, leisure and other retirement plans, advisers said.
“Healthcare costs are one of the most important expenses most retirees will face, but they remain undervalued,” Andrew Crowell, financial advisor and vice chairman of wealth management at DA Davidson, said in a release. “Medicare inflation is typically at least twice the overall inflation rate, but many people deny the fact that this could someday impact their retirement strategy.”
How much will my medical expenses be after I retire?
According to Fidelity, couples retiring at age 65 in 2025 will spend an average of $345,000 on retirement health care costs, up nearly 41% from $245,000 in 2015.
When older adults require long-term support and services at home or in a nursing home, the costs are high. The U.S. Department of Health and Human Services estimates that people who turn 65 today have a 70% chance of needing long-term care services or assistance with activities of daily living at some point during their golden years.
The least expensive option is adult day care services, with a national median cost of $95 a day, or $24,700 a year five days a week, according to the 2025 Genworth/CareScout Cost of Care Study. If more care is needed in a nursing home, the median cost can reach $114,975 per year for semi-private rooms and $129,575 per year for private rooms. These costs are likely to continue to rise in line with inflation, the report said.
Can I take Medicaid?
Many Americans who don’t have enough money to pay turn to Medicaid, which may cover long-term care not covered by Medicare.
However, there are income and asset limits for receiving Medicaid. Medicaid in 2026 generally limits a person’s countable assets to $2,001 and, for long-term care, monthly income to approximately $2,901, although the amounts vary by state. Asset limits apply to bank accounts, stocks, and secondary property, but primary residences, vehicles, and personal effects are generally exempt. Income that counts includes Social Security benefits, pension payments, IRA payments, real estate income, alimony, dividends, salaries, and wages.
Medicaid also has a lookback period of about five years, during which time you can be disqualified if you pay for your grandchildren’s education, pay someone’s debt or rent, donate money to charity, or sell something for less than market value. You may also be subject to a penalty that prevents you from applying for Medicaid for a period of time.
Are there options for those who don’t have a plan?
Americans may consider Medicaid pensions, experts say.
“It depends on how much wealth people have,” said Stephen Connors, founder and president of Connors Wealth Management. “Middle-class people can take advantage of this. Low-income people already qualify for Medicaid, but if you’re middle class and doing well but don’t have a lot of savings or long-term care insurance, this is a way to avoid looking back and qualify for Medicaid right away.”
How do Medicaid pensions work?
If your spouse suddenly needs long-term care, you can use your extra savings to purchase a Medicaid annuity. By tapping into your savings with a lump sum payment, your spouse can receive Medicaid assistance right away, and you can have a steady monthly income to live on.
“It’s an escape route,” Connors says, but there are rules. For example, he said, Medicaid requires pension recipients to designate money that cannot be passed on to heirs, and monthly payments must begin immediately. Annuities are also irrevocable and cannot be changed, canceled, or converted into cash.
“Also, insurance benefits must be paid until the term expires,” said attorney Kelsey Simasko of the Simasko Law Firm. “If a nursing home spouse dies, the surviving spouse cannot cash out the policy. If the policy is purchased with IRA money, the policyholder must pay taxes on the annuity payment.”
Interest rates are low, such as 1%, because pensions are intended for crisis protection and are intended to be withdrawn rather than increased, he said.
Will the advisor recommend a Medicaid pension?
If the circumstances were right, “I would definitely recommend it to people,” Connors said. “It’s within the law, so it’s not shady at all. The cost of long-term care is very high. So if you don’t have long-term care insurance and you’re going to be in a nursing home, your spouse can live on instead of having their assets written down.”
“These products can be the difference between being covered by Medicaid and having to pay for them privately. When appropriate, these can be great tools as long as families are aware of their unique features,” said Simasko.
“Do not purchase these products without consulting an experienced Medicaid attorney,” she warned. “These are not the types of insurance you want to buy before you are sure someone needs Medicaid long-term care.”
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
