I’d completed basic research for myself, and decided to share what I found with you. Many of us know of individuals and families who have faced it; my financial planner says it’s time for me to give it some thought.
I want to encourage you to plan for the possibility of long term care. In just a few minutes.
Have you thought about the possibility that you or a loved one may eventually need long term care? Has your financial planning included possible health care costs?
…the future? Unpredictable.
What is the probability of a boomer needing help with their long term care costs?
Our odds of staying in a long term care facility:
– less than half of all men 65+ and over half of all women 65+ will spend some time in either a long term care facility or will require related support;
– one out of ten men that visit a long term care facility will stay there longer than a year, and one out of four women will stay longer than a year;
– less than half of all people who stay at a long term care facility will spend more than six months there;
– 10% of all nursing facility residents will stay longer than three years.
How would you pay for long term care costs?
Most people use one or a combination of these options:
– pay for any care out of pocket – use savings
– rely on family members
– use a deferred lifetime annuity to pay for care
– run through their own funds and then opt into Medicaid or other low income assistance
– use long term care insurance.
Did you know that Medicare typically doesn’t cover nursing home stays or at-home health services? Did you know that nursing home stays can cost more than $100,000 per year in many parts of the U.S.?
Most health insurance covers things like hospital stays, medical procedures, doctors’ office visits, and prescription drugs. But the costs of long term care services such as nursing home stays are generally not covered. Even Medicare will cover only short stays in nursing homes, or some in-home care, but only under specific conditions.
Many people see their life savings diminished by just a few years, or less, of long term care.
Long term care insurance is designed to cover these types of expenses such as:
– nursing home stays
– care in the home, such as skilled nursing care, OT and PT, and help with personal care
– Alzheimer’s care facilities
– assisted living facilities
– hospice and respite care services
– adult day care centers
– home modifications.
LTC insurance companies offer this type of coverage to individuals who want to financially protect themselves should they become unable to care for themselves due to illness, disability, or other impairment. If a chronic illness, such as fibromyalgia, or a cognitive disease like Alzheimer’s runs in your family, it may be in your best interest to purchase LTC insurance. You will be professionally cared for if/when you become ill, and your children, other family members, or friends won’t deplete their savings as they try to pay for your long term care.
Here’s how the cost of an LTC policy is determined:
– your age when you buy the policy
– the maximum benefit the policy will pay per day
– the maximum length of time the policy will pay out benefits
– a waiting period (until the policy kicks in)
– policy features such as inflation protection.
Some people find that given the high costs of LTC insurance and the gain from other investments that you could make with that same money, your safe bet may be to stay away from LTC insurance.
What should YOU do?
– become informed
– assess LTC insurance
– explore your other options (see combination of options above)
– make your decision and create your plan.
Long term care. Reading time – complete.
Two personal suggestions:
– use a retirement calculator, which can help you run differing scenarios for long term care (one option is https://newretirement.com/retirement-calculator/default.aspx);
– talk with a financial advisor/your estate planning professional.
Thank you to these resources:
“4 Easy Steps to Help You Plan for Long Term Care and a Better Retirement,” Retirement News > Long Term Care> Articles
“Long-Term Care Calculator”, AARP, www.aarp.com
“Less is more: The dilemma over long term care insurance,” Darla Mercado, Personal Finance
“LTC (Long Term Care) Insurance: Risks and Benefits,” https://findlaw.com
“When is Long Term Care Insurance a Good Thing,” Financial Web, www.finweb.com