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Everyone ages. And sometimes we need nursing home care. We suggest you consider planning for a brighter future and look into long-term care insurance. For more information, read this three part article written by Nancy and long-term insurance expert, Reed Downey, Jr., who has been a life and health insurance agent for nineteen years. Be safe, |
Part Two of a three part series on our changing
health care needs and the financial options we have as we age
In Part One of this series, we discussed the real possibility that each of us will require nursing home or other long-term care.
Sound financial planning means considering all of our options. Failure to consider long-term care needs can be ruinous. Insurance industry sources tell us that "$8 out of every $10 spent by older Americans for health care is for long-term care."
OPTIONS 1. Paying as you go: The rich are generally able to finance all levels of necessary care as out of pocket expenses. Your investments may not provide the security you expect. In 40 years, half a million dollars will only provide for about one year of care. This is based on current costs of $127/day with a 5.8% inflation factor.
2. Home care by the family: Be realistic. Can you depend on a family member to sacrifice his, or more likely her, life to care for you? Are the financial assets available to provide for medical extras, relief caregivers and skilled nursing care as needed? Less than 5% of long-term care comes from churches and charities. Is this an option you will be able to count on when you need it?
3. Private insurance from employers: A few employers provide some form of long-term care insurance. If your employer does offer long-term care insurance, check your policy carefully to see there are no gaps in your coverage. Private insurance pays mainly for skilled care, not for help with daily activities. Look at the length of coverage. Must you be hospitalized before benefits begin? Make sure your employer provided policy is portable. That is, can you take the coverage with you if you change jobs? If your employer does not provide any long-term care coverage, find out if this is a benefit the company would consider providing. There may be tax advantages to employers who offer long-term care insurance.
4. Veterans Affairs: Veterans may be eligible for VA care. Find out what benefits apply in your situation. The VA now provides about 1.5% of this country's long-term care.
5. Medicare and Medicare supplements: Medicare is currently supplying about 15% of the long-term care benefits being used. Medicare pays nothing more toward nursing home care after 100 days. A mandatory period of hospitalization is required first. Medicare pays for skilled care and home health visits, not basic custodial care. Medicare supplements often limit care as well. How will you be cared for if you only need assistance in the activities of daily living? Most of the long-term care that people actually require isn't skilled care.
6. Medicaid: To qualify for Medicaid, you can have only $2000 in assets. Assets of married people are added together. The most the spouse at home can keep is about $79,000 in total assets. After the death of the second spouse, Medicaid must be paid back. Giving away assets just to qualify for Medicaid can result in criminal penalties. Giving assets to your children can lead to other problems:
7. Life Insurance: Some life insurance policies can be used to provide for long-term care. Read your policy carefully and check with your agent.
8. Reverse Mortgage: You may be able to sell your home to a financial institution that will rent it back to you. Make sure you get a fair price for your home. Have a trusted attorney check over the contract. You may receive a greater long-term care benefit from the sale of your home by using some of the money to buy long-term care insurance. If the money is used to purchase care directly, it could be completely gone in a year or two. Remember, nursing home costs begin at over $30,000 per year. The better the care, the greater the cost.
9. Long-Term Care Insurance: Purchasing your own long-term care insurance may offer you the best protection against the problems of aging, illness and disability. Policies can be tailored to your needs and expectations. If you come from a family whose members generally live to an advanced age in poor health, the right long-term care policy can protect you.
Cost considerations for your own long-term care policy:
Part One of this series introduces us to the basic concepts of long-term care insurance and the reasons why it should be necessary part of our financial planning. In Part Three of this series, we will discuss what to look for in good long-term care policies and some precautions.
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