How much more will gas prices fall?

I still have about 20 years until retirement. While I've heard a lot about the health of Social Security and questions about what it will look like by the time I retire, I haven't heard anything about the health of Medicare. Is it projected to remain solvent 20 years from now? Do health care companies offer "pre-retirement" health insurance I can invest in now so that I won't have to pay out the ear to supplement Medicare once I'm retired?
— Steven, Reno, Nev.

Like any retirement plan, Social Security needs an update from time to time, and its overdue for one now. But if Congress and the White House can make some relatively minor fixes soon (just as Ronald Reagan did in the mid-80s) there’s no reason Social Security can’t go on supporting retirees for another 75 years.

Medicare is a different problem: It’s seriously broken and at a much greater risk of going broke. Part of the reason is that the U.S. health care system continues to pile on expenses without any effort made to reform the way it’s financed. In its current state, it’s just not sustainable for another generation. Everyone seems to agree on the basic problem, but the system is so complicated — much more so than Social Security — that it’s much harder to agree on solutions.

Trying to protect yourself now with insurance is problematic. The most popular form of “pre-retirement” insurance is a policy that covers long-term health care. In theory, you buy now at a relatively healthy age, and your premiums are held to manageable levels as you get older. The policy kicks in for long-term illnesses after a certain period (30, 60, 100 days — think of it like a deductible) and then pays the cost of long-term care in a hospital or other facility. In theory, this protects you and your family from financial ruin in the event of the need for extended care.

That’s when things get complicated. A serious acute illness — like a major operation — is usually not covered. While the policy may limit premium increases, there’s no guarantee that base rates (those that apply to everyone in a given state) won’t go up faster than you expect.

The result is that, if the income from your retirement savings don't keep up, you could find yourself unable to keep up with the premiums as you get older — just when they need the coverage. That would mean you'd have paid premiums for 20 years — and end up with no coverage. (Some policies include riders that pay you back some of the premiums if you cancel, but this only increases the cost.)

Once they reach 65, many retirees who are eligible for Medicare buy “supplemental” policies to fill in the gaps of what’s covered. As the system gets stretched further, it’s likely that these coverage gaps will widen. So the best strategy might be to set aside your own “health care premium” fund that you use to purchase coverage when the time comes.

An even better idea would be to press your Congressional representatives to get serious about fixing Medicare and health care insurance generally. Unless and until we do, the cost of reasonable insurance for retirees is just going to keep going up — whether it's paid for by Uncle Sam or our retirement savings.

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