Long-Term Care Insurance Myth Busters

What’s the biggest expense you’ll face in retirement? Is it housing? Travel? Food and dining out? Insurance? All of those could be major expenses, and it’s important for you to include them in your budget so you can plan accordingly. However, as you’re planning your retirement spending, don’t forget about another major, potential expense - long-term care.

Long-term care is treatment or support for people who can’t perform basic activities of daily living on their own. These activities include things like getting dressed, bathing, eating and even using the restroom. Long-term care is often provided in a nursing or assisted-living facility, but can also be provided in the home.

As you might imagine, long-term care isn’t cheap. According to the U.S. Department of Health and Human Services, the average private room in a nursing facility cost nearly $7,000 per month in 2010. An in-home care provider cost on average $21 per hour. If you pay those costs out-of-pocket, it could quickly drain your nest egg.1

One option is to purchase long-term care insurance. With long-term care insurance, you pay premiums today, and then, should you need it in the future, the insurance company will pay for some or all of your long-term care.

Unfortunately, many retirees opt not to buy long-term care insurance for a variety of reasons. Below are some of the common reasons why people don’t buy long-term care coverage. If you’ve been resisting long-term care insurance and some of these reasons sound familiar to you, it might be time to reconsider your position.

I’ll never use it.

Don’t think you’ll need long-term care? Let’s hope that’s true. However, research from the U.S. Department of Health and Human Services suggests a majority of retirees will need some form of long-term care in their lifetime.2

In fact, 70 percent of today’s 65-year-olds will require long-term care. On average, they’ll need that service for multiple years. And, 20 percent of 65-year-olds will need long-term care for more than five years.2

It’s easy to see why so many retirees face the prospect of needing long-term care. People are living longer. With advanced age comes a wide range of physical and mental conditions. Also, cognitive issues like Alzheimer’s are on the rise, forcing many retirees into assisted living or nursing communities. It’s certainly possible, if not probable, that you will need long-term care at some point during retirement.

Medicare will cover my long-term care costs.

Many people also assume they don’t need long-term care insurance because Medicare will cover the cost of their care. The truth is Medicare only partially covers long-term care, and that’s only in certain circumstances and for a limited period of time.

In most cases, Medicare will only cover long-term care if it’s directly related to a hospitalization for a specific condition. Also, your care must be part of skilled nursing care. Care simply to help with daily activities of living such as bathing and getting dressed may not be covered.

Finally, Medicare only fully covers the first 20 days of nursing care. It then partially covers the next 80 days. At day 100 of nursing care, Medicare coverage ends and you are fully responsible for all further payments.3

While Medicare may provide some benefit, it’s hardly a long-term coverage strategy.

I can only use my long-term care insurance if I go into a nursing home. I don’t want to do that.

It’s understandable you may want to stay in your home for as long as possible. However, long-term care insurance won’t force you into a facility. Actually, it may help you stay in your home longer.

Many long-term care policies cover not only care in a facility, but also in your home. You can use your benefit to hire outside help or even to modify your home to accommodate wheelchairs, lifts and other mobility devices. Without long-term care insurance or other funding, you may be forced to rely on Medicaid, which could in fact require you to stay in a nursing facility.

Long-term care may be an unpleasant reality for many retirees. Fortunately, you can take steps now to plan for it. If you’re ready to discuss your plan for long-term care, contact us at Carstens Financial Group. We welcome the opportunity to discuss your needs and help you find the right strategies.

1http://longtermcare.gov/costs-how-to-pay/costs-of-care/
2http://longtermcare.gov/the-basics/how-much-care-will-you-need/
3https://www.medicare.gov/coverage/skilled-nursing-facility-care.html

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.

 15619 – 2016/4/28