Long-term care (LTC) has been in the news lately, for all the wrong reasons. But it has gotten a lot of people thinking about what their plans are, what kind of experience they want, and how they are going to pay for it.
Frankly, as with any topic surrounding seniors, there are a lot of misconceptions, bad information, and flat out wishful thinking. Here are some hard facts to confront as you build your LTC plan.
You are likely to need it
8.3 million people in the United States receive some form of LTC. The average amount of time spent in an LTC facility is two years. The average cost of LTC services per person was $172,000 as of 2016, according to the AARP, and it’s only increasing.
Remember, LTC isn’t just for people who have lost cognitive function or are at the end of their life. Severe disability, injury and or illness can require LTC. 52% of people who turn 65 today will require LTC at some point.
It’s easy to imagine that your spouse or loved ones will provide care for you. In addition to the physical and emotional toll this can place on your caregiver, it requires time off of work and an average of $10,423 in out of pocket expenses.
Medicare or Medicaid might not foot the bill
Medicare might help pay for a short stay in a nursing facility, for hospice care or for the costs associated with home health care. They only cover the costs for 100 days however, and you are on the till for 100% of the costs thereafter.
It is true that Medicaid will provide more long-term assistance. But Medicaid is means-tested. In other words, your assets need to be depleted before it will kick in to help pay your bills. If you have plans to leave behind an inheritance, or even have amenities for yourself, it’s best to be prepared.
Consider LTC insurance while you’re young
LTC insurance can ease the financial burden for you and your family. Of course, nobody wants to pay for benefits they won’t be able to use. The temptation might be to wait and see how your health progresses, or put it off until you are in your retirement years.
Think of it this way. How much would homeowner’s insurance cost if your house were on fire? By waiting, you risk seeing your premiums skyrocket, or being unable to get coverage entirely. Consider buying LTC insurance when you are in your early- to mid 50s.
As with anything, make sure you are having discussions with your partner about what an LTC solution might look like. This would be a good time to discuss end of life medical decisions and health care directives as well. From there, you can work with your advisor to work LTC insurance into your financial plan.
This article was originally published in the Pioneer Press. You may view the article here.
