THE U.S. DEPARTMENT of Health and Human Services reports that 70 percent of Americans who reach age 65 will need long-term care at some point. Nobody wants to think about themselves or a loved one needing long-term care. But if you don’t have a strategy in place in advance, the cost of long-term care could put your family in crisis. Proper planning can make a financially and emotionally challenging situation more manageable. The following basic information answers some questions about long-term care and how to plan for potential long-term care needs.
What is long-term care?
Long-term care describes services that assist an individual with health and/or personal needs in a variety of settings over an extended period of time. Long-term care may be provided at a facility, by a caregiver at home or through community services.
What about paying for long-term care?
Medicare, Medicaid and out of pocket are common ways individuals pay for long-term care. The Department of Veterans Affairs may pay for longterm care services for specific populations. Long-term care experts suggest that you don’t underestimate the cost of long-term care, and that you don’t assume that Medicare, Medicaid or private health insurance will cover it. For example, if custodial care (help bathing, preparing meals, managing your medications, etc.) is needed, Medicare does not pay for it just as part of growing older. Medicaid will pay for it, but only once other assets have been reduced. Private insurance varies greatly, but, like Medicare, usually does not pay for it. So you have to be aware and informed and really understand how these options work. Long-term care could cost you six figures a year, depending on your needs and other factors. You cannot rely on Medicare, Medicaid or private insurance to pay the majority of costs. Longtermcare.gov and eldercare.gov are resources for further information. You can also phone the Eldercare Locator, at 1-800-677-1116, to talk about services available in your area.
If you’re married, you need to think about the standard of living for the spouse who’s not in the nursing home and the impact that paying for long term care can have on everyone in the family who has to adapt.
What should you look for in long-term care insurance?
Long-term care insurance is designed to cover long-term care services and support. Some people choose to buy long-term care insurance to help cover potential costs. Policies differ, and as with selecting any other type of insurance, the key is to compare plans before you buy and select the one that aligns with your needs and preferences. Before you buy a policy, read and understand the fine print. Do your homework. Ask about the history of the company’s premium rates so you can evaluate increases, compare prices and coverage, look closely at deductibles and make sure the insurance company is reputable and hasn’t been involved in any bad-faith lawsuits. A trusted financial adviser or long-term care insurance specialist can help you decide which policy is right for you and your family. Overall, long-term care policies have financial and time limits. If you are already receiving long-term care services due to health issues, you may not qualify for insurance because it requires medical underwriting. However, you may have other options, such as buying a limited amount of coverage or coverage at a higher rate. If you are reluctant to buy long-term care insurance because you think you may not have to use it, you can research and compare life insurance and annuity hybrid products that have long-term care benefits.
The bottom line of all this: Don’t be caught short. Planning for long-term care needs can help you be safe and prepared.
To learn more about Long Term Care as an agent or for your clients, please contact David Oberle.