What is long-term care?
Long-term care is defined as: “services and supports necessary to meet health or personal care needs over an extended period of time.” It could include assistance with:
Moving around – such as moving from a chair to the sofa
Dealing with issues related to incontinence
Using the facilities in the restroom
Routine shopping and/or other errands
Cooking meals and then cleaning up afterwards
Making sure the right medication is taken at the right time
Managing money and perhaps other financial issues
This is not a comprehensive list by any means but you get the idea.
How much does long-term care cost?
The cost of long-term care varies from state to state, but in California the median cost you would pay for assisted living is about $48,000 per year, a semi-private room at a nursing home is $91,250, and home care is $52,624.
Won’t Medicare pay for this?
Hmm … not so much. Medicare pays for very specific services, and many conditions apply in terms of when they start paying and for how long. Medicare will pay for your care for the first 20 days. From day 21 to day 100 Medicare will pay some, but if you need to remain in the facility for more than 100 days then you will be paying full pop.
What about Medicaid?
Medicaid will kick in only once you have depleted your countable assets, so if you have any kind of income from investments or anything at all, it would have to be pretty low for you to qualify.
What are my chances of needing long term care?
Statistics show that if you are 65 or more, you have about a 7 out of 10 chance of needing some type of long-term care at some point in your life time. For those that will need long term care, 1 out of 5 will need to pay for long term care for five years. The average man that needs long term care will need it for just over two years and almost four years for a woman. This is a good basis – a start, anyway – for determining how much care you might need.
What are my options?
In general, you have three choices:
You could ‘self-insure,’ in which you rely on your savings and investments to fund your future long-term care needs. In this scenario, you might be in danger of depleting your retirement portfolio and causing serious impact to your quality of life down the road, assuming you live to a ripe old age.
The second option is to purchase stand-alone long-term care insurance. Similar to car insurance, health insurance, and other types of insurance, you would continue making premium payments and if you never need the coverage you will never get your premiums back. However, you of course will then have the insurance and the peace of mind, just in case you ever needed to file a claim.
The third option is more of a hybrid long term care policy. It combines a permanent life insurance policy with a long-term care rider. These policies allow you to access money from the death benefit while you are alive to pay for long term care expenses if you were to go on claim and end up needing long term care. These policies typically cost more because as long as you keep the policy in force, one way or another the policy will pay out the death benefit. It will either pay it to you while you are alive to cover long term care expenses, or it will pay out as a death benefit to your heirs when you eventually pass away.
What Do I Do?
Choosing a long-term care policy that fits your needs is difficult. Especially since you are probably in very good health and can’t imagine having to be in the position to need it. But it happens. Milestone Wealth specializes in long-term care insurance, and can help design a policy that is going to work for you. It isn’t as cut-and-dried as other types of insurance, and it can get downright confusing when you look at all the little complexities that might affect your premium.
You need to understand what type of care is covered and what is not. Above all, you don’t want to run out of a benefit just when you need it most. And most importantly – you don’t want to be paying for coverage that you are unlikely to need.
Milestone Wealth: your long-term care insurance specialists
Long-term care insurance is a complex subject, offering a wide range of benefits with an equally wide range of premiums. It is always a good idea to work with a professional who understands what to look for and can help you decide on a policy that works for you. If you would like to find out more about long-term care insurance, give us a call today.