Long-term Care Plans, Part 1
Life expectancy is increasing, but as a result, many people are living longer in poor health. Coupled with rising medical costs and the potential cutbacks on programs like Medicaid, it is extremely important that everyone, especially those in their 50s, begin to address the major components of long-term care (LTC).
In this series, I will address how you can create a plan that will help meet your future financial and LTC needs.
Go to artofthinkingsmart.com for more information on LTC, your options and strategies that can help you plan for it!
• What is long-term care? LTC is a range of medical and non-medical support for people of any age, primarily for seniors. LTC provides assistance with active daily activities (ADLs), which include bathing, continence (controlling one’s bowels and bladder), dressing, eating, toileting and transferring (moving in and out of bed).
• How likely will one need long-term care? Seventy percent of people will need long-term care services at some point after turning age 65.
• How long will long-term care be needed? The average length of LTC service is 3.7 years for women and 2.2 years for men; 20 percent of those who will need LTC will need it for more than five years.
• How much does long-term care cost? Long-term care costs vary depending on the type of care needed. The cost of long-term care has increased steadily every year, with Hawaii’s costs among the highest in the country! For one year, the cost of a nursing home (private room) is $135,050 and private-duty home health aide is $58,525. Visit artofthinkingsmart.com/care to see an average breakdown of the different LTC costs and facilities.
• How do I pay for long-term care?
1) Self-fund: You can pay for your care out-of-pocket and/or have family members take care of you. However, many do not want to be a burden to family members, and paying anywhere from $50,000 to $100,000 a year isn’t an option. Fortunately, there are other ways to pay for it.
2) Government Funding: In order to qualify for programs like Medicare and Medicaid, there are many limitations and restrictions.
Medicare is a federal health insurance program for those over 65 and younger people with certain disabilities. Contrary to what many think, it does not cover most LTC, only certain home health services and short-term skilled-nursing care.
Medicaid is a joint state and federal health insurance program for those with limited assets and income. Total assets have to be less than $2,000, so many will have to drawdown their hard-earned assets. To prevent people from giving their assets away, Medicaid checks your financial history five years prior to applying for the program. There are also Veterans’ Benefits and the Older Americans Act programs.
3) Private Financing Products: There are many types of annuities, reverse mortgages, life settlements, LTC insurance and life insurance products that are used to pay LTC costs.
Daniel Peters, VP at WealthBridge Inc., states, “Since there is no one-size-fits-all policy, it is important to have a comprehensive financial plan and strategy to make sure it covers what you need. You don’t want to buy too little, or too much.”
Next week I will cover in more detail how the various LTC products work and the differences of each.