What’s your plan for retirement? Do you want to travel? Perhaps spend time with family? Maybe you want to pursue a new hobby or volunteer for a favorite cause. One thing you may not be thinking about spending time in a nursing home or assisted living facility. According to the U.S. Department of Health and Human Services, that could be a likely scenario. They estimate that
that today’s retirees have a 70 percent chance of needing long-term care at some point in their lives.1
Long-term care is a broad term, but it usually refers to extended assistance with basic living activities, like bathing, mobility, and even incontinence. It may include medical care, but it usually primarily refers to custodial assistance and household support.
Long-term care can be provided either in the home or in a facility. Either way, it can be costly. If you fail to plan for the expense, you may be unprepared when the time comes. That means you may have to accept a level of care that doesn’t meet your standards.
Many seniors use long-term care insurance to offset the expense. With long-term care insurance, you pay premiums today in exchange for future coverage for long-term care expenses. Most policies will even cover care in the home or pay for home modifications like a wheelchair ramp or stair lift.
While long-term care insurance can be a wise strategy, many seniors opt not to purchase coverage. Without insurance, your funding options may be limited. Below are three alternatives to long-term coverage. Before you decide to forgo long-term care insurance, consider how you might otherwise pay for assistance.
Get help from your spouse, grown children, and other loved ones.
Many seniors rely on family and friends for assistance, especially in the early stages of care. Your spouse or grown children may be able to run errands, prepare meals, or help with basic household chores. They may even be able to help with more advanced needs like mobility issues or bathing.
However, you may not want to count on family to provide all your long-term care. Many of the issues that cause a need for long-term care are progressive. If you suffer from a condition such as Alzheimer’s, your care needs may increase as time goes on. You could reach a point where family and friends can no longer provide care, especially if you need skilled nursing or round-the-clock support.
Talk to your family and gauge their ability to assist. Also, explore local community groups and services. If you don’t have many low-cost options available, you’ll need to plan some other way to pay for care.
Rely on Medicare and Medicaid.
Many retirees assume that Medicare will cover all their health care costs. That assumption is usually incorrect. Medicare is a valuable resource that covers a wide range of health care costs, but long-term care usually isn’t one of them. Medicare may temporarily cover a stay in a nursing home if it’s the result of a hospitalization. However, it typically doesn’t pay for home care or long-term custodial care.
Medicaid may cover your long-term care if it’s provided in a nursing facility. However, you may have to deplete your assets before you qualify for coverage. Medicaid is meant to protect those who can’t afford to pay for health care. If you have substantial income or retirement assets, you likely won’t be eligible for protection. Many seniors spend down their assets paying for care before transitioning to Medicaid coverage.
Pay directly out of your own assets.
Of course, you always have the option to pay out of your retirement savings for long-term care. In fact, if you don’t have another strategy, that may be your choice by default.
For many seniors, the cost of long-term care is too substantial to pay directly out-of-pocket. Genworth recently conducted a study that found both assisted living facilities and in-home health aides cost at least $4,000 per month on average.2 When you consider that care is often needed over several years, it’s easy to see how long-term care costs can be a drain on your retirement assets.
Ready to develop your long-term care strategy? Contact us today at Carstens Financial Group. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18148 - 2018/10/17
Carstens Financial Group focuses on providing comprehensive asset management, estate planning and life insurance solutions. Allow us to help you secure your financial future.