What You Need to Know About Financing Long-Term Care
Have you considered that you may need long-term care in the future? According to the Administration on Aging, someone turning 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years.
With such a high probability, it makes sense that many are worried about how they will foot the bill for such services. How will you finance long-term care, should you need it in your Golden Years.
Thankfully, you do have options! But, as with most future plans, it is better to plan now than at the last moment.
Ways to Finance Long-Term Care
According to the Administration on Aging’s calculations, women need an average of 3.7 years of care while men need an average of 2.2 years of care. While a few years feels manageable, long-term care is expensive and can quickly drain a savings account.
Let’s examine some of the popular ways that many people will ensure their long-term needs are covered. No matter what services are needed, there is most likely going to be a hefty bill that will come along with it.
According to a Genworth Cost of Care Survey conducted by CareScout from 2004 to 2021, the prices vary depending on the nature of service. An hourly in-home caretaker averages $27/hour. That means, if you require full-term care for 40 hours per week (assuming a child or spouse can support you outside of working hours), you’re looking at over $56,000/year in expenses. Should you need around-the-clock care, this comes out to $236,520/year!
If you opt for a private room in a nursing home, the average cost for an American is $108,405/year for care. For general assisted living, normally with shared rooming, the cost averages $54,000/year, according to the study.
Government Programs
Without the means to personally finance your care, many older adults need to opt for the aid of a governmental program. Many are designed with the understanding that, no matter your background, there is a very realistic chance most Americans will need such care.
Medicare/Medicaid
Some of the most well-known programs in the country include Medicare, designed to cover the healthcare costs of those age 65 and over, and Medicaid, a combined state and federal program offered to those on a low income.
Unfortunately, while Medicare may cover some hospital costs (after a deductible is met), it does NOT cover long-term care, in-home care, not assisted living. What Medicaid will cover varies by state and by a person’s specific eligibility. For more on Minnesota’s programs, visit this website.
Program of All-Inclusive Care for the Elderly (PACE)
While some states have a PACE program designed to assist those with Medicare with nursing home options, Minnesota does not have this option. Instead, Medicare recipients needing nursing home care are directed to contact the Elder Care Locator at 1-800-677-1116 or via its website.
State Health Insurance Assistance Program (SHIP)
Another helping hand under the Medicare umbrella is the state-specific SHIP program. For assistance with this counseling assistance that can direct you to gap-covering insurance programs, visit this website.
Department of Veteran Affairs
If you served our country (and thank you for doing so), you may be eligible for long-term care or at-home care coverage through Veteran Affairs.
Social Security Administration Program
Should your long-term care result in a disability, the type of assistance you may need for a year or more, or limit you from the workplace, the Social Security offices may be able to assist. Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) may come into play depending on your circumstances.
The process for applying for such programs, however, can take three to five months. You may need to find interim solutions while seeking care that has a more immediate application.
Find Services for Your Needs
If you are seeking assistance in discovering which governmental programs may fit you best, you can use one of two programs. The National Council on Aging (NCOA) offers the Benefits Check-Up program. To do so, call 1-571-527-3900 or visit the NCOA Benefits Check-Up website. Likewise, Benefits.gov is a website dedicated to searching federal, state, and local government benefit programs. For more information, visit Benefits.gov or call 1-800-FED-INFO (1-800-333-4636).
Private Financing Options
If you’d like to avoid relying on government programs, you have other options! Smart financial planning can go a long way to helping you save. Options, such as insurance policies, can make a major difference.
Pay Out-of-Pocket
If you’ve been planning for your long-term care costs, and are comfortable saving a couple hundred thousand dollars to cover you and your partner, you can pay for your care out-of-pocket.
Long-Term Care Insurance
One type of insurance coverage that can help you plan ahead for long-term care exists for just this reason. The price of coverage will depend on factors such as:
Age
Health
Gender
Medical status
Various insurance companies
Amount of coverage
Working with Rehm Insurance and Financial Services, you can do “one-stop shopping” and protect your assets while still planning wisely for any potential care you may need.
The American Association for Long-Term Care recommends that you seek the advice of an experienced insurance agent, offering a minimum of three different company estimates. Many policies will also offer you tax breaks, so be sure to ask your financial advisor more about these options.
Reverse Mortgage
If you prefer to put the equity into your home, knowing that you can later consider using it for your own long-term care, you may want to consider financial planning for a reverse mortgage. The U.S. Department of Housing and Urban Development (HUD) offers assistance in finding such programs online.
Life Insurance Policies
Some life insurance policies cover the need for long-term care. Some also offer combinations of life and long-term care insurance. Seeking the advice of a knowledgeable team can go a long way to finding the proper programs for your unique needs!
Does all this information have your head spinning? Don’t worry; I’m here to help. Schedule an appointment with my team, today, and let’s talk about your long-term care plans!
Reegan Rehm, and Rehm Insurance and Financial Services are independent of, and not affiliated with, The Lincoln Investment Companies. Insurance products are not offered through The Lincoln Investment Companies.
