As we age, we require more and more medical services. Paying for them can be a challenge, especially because most people’s income drops significantly after retirement. Medicare for seniors will cover some expenses, such as inpatient hospital care. Other kinds of costs need to be paid out of pocket or with supplemental insurance. Good planning for your healthcare post-retirement pays off in big ways. One area that is very important to consider is long-term care.
What Is Long-term Care?
Long-term care is any kind of ongoing assistance with the day to day aspects of living. It can range from someone coming into your home to help you with meal preparation to accommodations in a nursing home. Sometimes, people receive long-term care from senior community centers or senior daycare establishments during the day and return home at night. Other people choose to live in assisted living facilities full-time if a nursing home is not necessary.
Care From a Loved One Vs. Professional Care
Many people get long-term care from family members who live with them or visit regularly. In this case, the care is usually unpaid. Often, however, family members are not able to provide all the necessary care. For example, people with chronic conditions might need special medical facilities. Patients with Alzheimer’s might be most comfortable in a memory care center. The rates for both professional home assistance and residence in a senior community can be high. Planning how you would pay for long-term care is an important thing to do when you get ready for retirement.
13 Things to Know About Long-Term Care
1. Most People Need Long-term Care Eventually
Many studies report that 50% of people who are over the age of 65 now will need some kind of long-term care in their lives. The most recent research suggests that this number could be closer to 70%. The reason for this widespread need is the fact that, with medical advances, we are living beyond our ability to care for ourselves.
2. Medicare for Seniors Does Not Pay for Long-term Care
While Medicare covers some stays in a nursing home, it does so with specific requirements and for a very limited period of time. To qualify for Medicare benefits, your stay must be preceded by three days in a hospital. In this case, Medicare will cover your entire stay for 20 days. After, it will pay 80% of your stay for 80 days. After a total of 100 days, the benefits stop.
3. You Can Purchase Long-term Care Insurance
Many long-term care policies are available. Each plan offers different benefits, including what percentage of your care it will cover and for how long. Things that you can purchase insurance for include:
- Helpers who come to your home
- Caregivers who live in your home
- A therapist
- A private nurse
- Adult daycare
- Respite care
- Hospice care
- Assisted living facilities
- Nursing home facilities
- Renovations that make your home more livable
4. The Odds of Using Long-term Care Insurance Are Greater Than the Odds of Using Other Forms of Insurance
As mentioned before, the odds of you needing long-term care insurance after age 65 are between 50% and 70%. Compare this probability with the chances of your house burning down (3/100) or the chances of your car being totaled (18/100). These situations are much less likely to happen. However, most people insure their homes and cars.
5. An Alternative to Buying Long-term Care Insurance Is to Self-Insure.
Self-insuring means taking the money that you would spend on your premiums and investing it elsewhere. Whatever returns you make on your investments are voluntarily set aside for your long-term care costs. This approach can work for very affluent people who have significant funds to invest. However, it is more difficult for the middle class.
It Involves Risk
One problem with the self-insured approach is that all investments involve risk. Conversely, when you buy insurance, the insurance company takes on your risk. Passing your risk off to the insurance company is helpful because you don’t want your assets to plummet right before you have an accident or a change to your health that necessitates long-term care.
You Might Not Receive Enough Returns
Another big problem is that the cost of long-term care is considerable, and many people don’t have the funds to acquire returns equivalent to the potential insurance benefits. Finally, many investments require years to mature. If you set aside money to pay for health-related issues that could come up unexpectedly, these assets need to be liquid.
6. The Benefits of Long-term Care Insurance Kick In When Certain Activities Become Impossible for You to Do Alone
Most insurance plans specify six activity categories:
- Eating
- Dressing
- Bathing
- Toileting
- Transferring (moving from a bed to a chair and vice versa)
- Continence
Usually, when you become unable to do two or more of these activities, you can use your long-term care insurance.
7. Long-term Care Is Not Age-Specific
While older people tend to need long-term care in greater numbers than younger people, the need is not determined by age. There are many younger people with disabilities or chronic conditions who receive long-term care. In fact, 40% of people who receive long-term care are between ages 18 and 64. As you get older and enter retirement, don’t just plan on receiving long-term care later in life. You could need it at any time.
8. Medicaid Pays for Some Long-term Care for People With Very Limited Assets
People who do not have savings or other assets can sometimes get long-term care through Medicaid. This program also pays for some people who started their retirement with resources but spent them down on healthcare costs. Care options with Medicaid are limited. It almost never pays for ongoing home care or residence in an assisted care facility. Therefore, people who are enrolled in the program often need to choose between moving to a nursing home or not getting support.
9. The Premiums on Long-term Care Insurance Can Be Tax-Free
Depending on the plan you buy, your premiums might be tax-deductible. You can talk with your insurance agent to determine if this is the case.
10. The Cost of Long-term Care Varies
It is difficult to determine what the costs of your individual long-term care will be because it will depend on the age at which you start care to receive the care, how long it continues, and what conditions you have. However, you can get a sense of the average cost of care for most people. This amount fluctuates greatly by region, so it is best to look at the situation in your state.
Many nursing homes cost around $60,000 a year, although this rate can go up considerably based on the quality of the facilities. The average stay at a nursing home is four years. Assuming the cost of $60,000 per year and a four-year stay, your total expenses would be $240,000. This amount does not factor in any at-home care you received before entering the nursing home.
11. Once You Qualify for Long-term Care Insurance, Your Premiums Cannot Go Up Based on Your Health
Applying for long-term care insurance early pays off. Once you have it, your premiums can go up, but not for you individually. Rather, they can only go up for the entire class of people you belong to, including you. That means that if you develop a chronic condition after you enroll, your provider cannot adjust your premiums accordingly.
12. You Can Buy Life Insurance and Long-term Care Insurance Together
Sometimes, you can get a hybrid plan that includes both life insurance and long-term insurance. In the case of these plans, some of the life insurance benefits get diverted to cover long-term care costs when they arise.
13. You Can Purchase Long-term Care Together With Your Spouse
Many plans allow you and your spouse to set up a pool of benefits that can be used for one partner or the other or both, according to the needs that arise. In fact, some providers offer spousal discounts.
Speak With an Insurance Agent
Being organized and educating yourself on your post-retirement options will give you the tools to navigate your healthcare needs, including long term care. A knowledgeable insurance agent can assess your situation and help you find a plan that makes you feel comfortable, both financially and in terms of your coverage. He or she will also give you more information about Medicare for seniors, including what is and is not covered.
Today, many plans are available. When you opt for long-term care insurance, you can choose how much you want to spend, where the money will come from, what benefits you would like to receive, and what percentage of your care you would like covered.
Planning for a Comfortable Retirement Means Considering Long-Term Care
Retirement is a wonderful stage of life and definitely something to look forward to. Understanding Medicare for seniors and the costs of long-term care can help you make the most out of this time. The right long-term care can help you stay comfortable and enjoy your favorite activities.
Speak with us at Senior Solutions Group to understand your options for long-term care. We look forward to helping you plan for longevity, health, and well-being.
