Financial Matters – How to Pay for Long Term Care

What if You Needed Long Term Care? The Need to Plan Ahead

With health care costs skyrocketing and Americans living longer than ever before, an increasing number of us face the possibility that we, or someone close to us, will require some type of long term health care at some point down the road. It's an eventuality none of us can afford to ignore. Planning for the expense of long term care has become an integral part of a sound financial plan.

What Are the Odds?

1 in 1200 people will have a home fire
1 in 240 people will have a car wreck
3 in 5 people will need Long Term Care after the age of 65

Being Accountable Vs. Depending on Others to Pay

It's time that we remove our heads from the sand, come out of denial, and act like mature adults and make wise, educated decisions for ourselves and our families! In order to be more accountable, we must first dispel some common myths:

Medicare will pay for LTC: Contrary to popular belief, Medicare only pays for nursing home care for a very short period following three days in a hospital for an acute illness or injury. Even upon discharge to a nursing facility for recuperation, Medicare only pays if you continue to qualify for needing skilled nursing care! Over the last several years, Medicare continues to reduce benefits making it more difficult for people to qualify for benefits. More significantly, the majority of people receiving long-term care require custodial or intermediate assistance rather than skilled nursing care!
A Medicare supplement or Medigap insurance will pay for LTC: Simply put, you buy a Medicare Supplement policy to pay for what Medicare doesn't pay for, your deductible amount and your co-insurance amount. It won't pay for long-term care, or any non-Medicare covered claims.
My disability insurance will pay for LTC: Wrong again! Disability insurance pays for a loss or replacement of income, not for the expense of long-term care, and the benefits paid by disability insurance stops when one reaches the age of 65.
The truth about Medicaid: While Medicaid does pay for long-term care it doesn't come without a price! Try spending down your assets and impoverishing yourself in order to be eligible for an extremely limited supply of Medicaid nursing home beds. In fact, it's no surprise that there's a waiting list for many Medicaid beds in facilities with an average of 70% of their occupants Medicaid residents. Medicaid reimbursement for caring for these residents is shrinking while the cost to provide the care increases. Furthermore, the care being delivered in these facilities becomes the subject of allegations of negligence and poor quality that fail to meet the industry standards. Think you can transfer or gift your assets to your children or other relatives? Think again! The government will go back five years and investigate your financial records for any such transaction and may disqualify you for Medicaid eligibility as a result.
LTC is just for old people: 40% of people needing long-term care are working age adults between the ages of 18 and 64.
LTC insurance costs too much or I'll put it off until later:
- Many people overestimate the cost based on what their insurance agent sells them on, with expensive benefits that they don't need instead of tailoring the policy to meet their needs and their budget!
- By waiting, you will pay higher premiums and run the risk of a change in your health, making you uninsurable!
I can pay the costs myself if I need care (I can self insure): According to a 2005 survey conducted by Genworth Financial Services, the average annual cost of a semi-private room at a nursing home was $61,000, an increase of 6% from 2004 and consistent with the average 4 to 6% per year. Long-term care insurance provides a sound financial planning tool with which individuals can leverage these costs.
Long-term care is equivalent to nursing home care. My spouse or my kids will take care of me: 80% of people needing long-term care receive assistance at home! Families may want to take care of their loved ones, but can they handle it on their own, and if so for how long? Today many children find that providing care to an elderly parent takes a heavy toll physically, emotionally, and financially. Do the family members have other responsibilities including taking care of young children or working outside of the home?

Top 10 Reasons to Consider LTC Insurance

Independence – When you do not want to have to depend on family for care.
Assure Quality Care – When you do not want money to be an issue in getting the best care.
To Have a Choice - When you want all options open for care.
To Avoid Being a Burden – When you know your children have their own lives.
To Leave an Inheritance – When you want a choice where your money will go when you go.
To not be Wiped Out – When you want to know your money will last as long as you last.
To Stay Off Welfare – When you want to avoid government aid (Medicaid).
To Protect Spouse's Lifestyle – When you can afford to pay for care with your cash flow but it would also lower your spouse's standard of living.
To Protect Your Principal (Assets) – When part of your retirement income is derived from nest egg earnings, you do not want to eat away the principal.
Peace of Mind – Bottom Line: You just want all bases covered, where no health crises can pull the financial rug out from under you.

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Want to know another way that the federal government can help fund your long-term care expenses but is keeping it a secret? Contact us today to find out!