Long Term Care Planning

Long-term care planning should be a primary concern to families of the sandwich generation. This generation is faced with caring for their own children while simultaneously helping to care for their aging parents.  Most of us feel that the need for nursing care or assistance with every day activities is not something that would happen to us.  If it does, the plan we have in the back of our minds can potentially be unrealistic and a burden to other family members.  This is why, we at Mintco Financial, feel that it is imperative we put a realistic long-term care plan in place  as part of your retirement planning.  The time for this planning is now while your health is good and your at your current age.  The cost of your protection is based on your age and your health.  The sooner you take action the lower the cost.

Some common misconceptions we hear from clients are the following:

MEDICARE WILL TAKE CARE OF THE COSTS Medicare may pay for a nursing home stay under certain circumstances, but it won’t cover long-term care there. The same thing is true with at-home care.

IT WILL NEVER HAPPEN TO ME Why allocate a portion of your retirement nest-egg into a long term care program if there is a chance you will never need it? It’s a reasonable question, so consider your odds.

The long-term care insurance industry, thinks your odds aren’t so great. For people age 65 and older who have long-term care insurance, there is a 45 percent chance of making a claim, though it ranges from 30 to 56 percent depending on gender and marital status.*

Let our team of advisors show you methods to protect your nest-egg without ever being concerned about depleting  it.

I CAN SELF INSURE Can you really afford to pay for the care yourself? The average rate for a private room in a nursing home is approximately $229 a night, or $83,585 a year, on average, though it can range widely by geography. Average costs for home health aides are $21 an hour **. And what is the true cost of being among the unlucky here if you roll the dice and buy no insurance at all? The total cost without insurance would be about $1.5 million. We can show you how to cover these expenses without eating away at your retirement nest-egg, so why not plan ahead?

I WILL QUALIFY FOR MEDICAID If your plan is to qualify for Medicaid to pay for nursing home costs, you may be surprised at how much this plan will cost you, and perhaps your family too.  Not to mention how much freedom you will give away to qualify for this plan.  In order to qualify for Medicaid you have to spend down a portion of your assets.  Each state has their own qualifications.  When we approach long-term care planning with our clients, if their assets are low enough to use Medicaid as an option we inform them of such.

MY KIDS WILL TAKE CARE OF ME This is the sort of thing you might say if you’ve never actually had to change an adult relative’s diapers. Or watched a nearby relative provide most of the care for an elderly family member, leading to the relative’s physical exhaustion, emotional devastation and extreme financial sacrifice from lost wages.

So, if that is your plan, test it out and make sure it works.  Show up at your designated child/caregivers home unannounced with your luggage and knock on the door.  When someone answers the door go into the living room and sit in their favorite lazy boy recliner and tell then you need to be cared for over the next 30 days.  This includes eating, bathing, transportation, assistance getting in and out of bed, etc.  Most likely within the first few days both you and your caregiver will realise this plan will not work.  If you have family members that think from their hearts and do want to help you any way they can, wouldn’t it be nice if you could have a plan that will pay them for their help?

THE CHILDREN AS FINANCIERS Still other parents assume, without really asking, that their children will pay for their care if the parents run out of money. Or one sibling assumes, without ever discussing it with the others, that the children will split any costs for care equally.

THE COST TODAY In the first half of 2010, individuals buying through an insurance agent or financial adviser paid a $2,180 annual premium for common plans that pay claims that are not taxable for the policy holder. Given the price tag, it’s easy to see why shoppers might have demurred as the economy swooned over the last two years.

If you have no interest in turning your money over to companies who have gotten it so wrong, I salute you. But if the insurance company professionals can blow the projections, you certainly can too. So you had better have a plan, and a backup plan, too, for when your forecasts inevitably go awry.

* MetLife Survey: www.Metlife.com | ** www.MetLife.com

  • 1. Medicare/Medicaid:

    The first line of defense for medical expenses for seniors is Medicare, which is health insurance coverage provided by the federal government to most people who are 65 years and older, as well as some younger people with disabilities or kidney failure. As it relates to long-term care, Medicare covers certain expenses including those associated with limited stays in nursing homes, home health agency care and hospice care. Although Medicare will not pay for stays in assisted-living facilities, it may cover the costs of some services — including home health care and doctors’ visits — provided in these facilities.

    That said, about 50 percent of people in nursing homes rely on personal wealth to pay for their long-term care, according to Medicare. An additional resource to keep in mind is Medicaid. Jointly funded by the federal and state governments, Medicaid provides health insurance to the poor as well as those who are 65 years and older, disabled or eligible for other government aid. Medicaid offers Medicare beneficiaries assistance with their out-of-pocket expenses and also covers the costs of prescription drugs, eyeglasses and hearing aids as well as other services not covered by Medicare. A key benefit of Medicaid is that nursing home benefits outlast those offered by Medicare which always end after the first 100 days in each benefit period.

  • 2. Long-term care insurance:

    One option to patch some of the holes in the safety net created by Medicare and Medicaid is a private insurance policy called long-term care insurance. Basically, long-term care insurance is coverage for nursing homes, assisted living centers, home health care and many services related to elderly assistance.

    Additionally, long-term care insurance can cover any individual in case they are disabled and need individual care no matter their age. In cases where an elderly patient is too sick to take care of themselves and unable to afford nursing care, the individual’s assets as well as those of their spouse must be completely maxed out before the government steps in to help. It is, however, not medical insurance.

  • 3. Is it a good thing to have?

    A long-term care insurance policy can protect your assets and those of your spouse in the case where you would otherwise be unable to afford care. According to bankrate.com, the average cost of long-term care insurance can range from $400 a year (for individuals in their 30s) to $1,000 for those in their 50s and 60s.

    If you are young and healthy, long-term care insurance may not be the right solution for your eventual care costs. Instead, a young person would do much better investing the amount of the annual premium in the stock market and self-funding their care.

    While there is no single rule of thumb to follow regarding coverage, take into account your family medical history, your net worth, age and marital status to determine if a long-term care policy is the right choice for your care concerns. United Seniors Health Cooperative recommends seniors have at least $75,000 in assets and an annual income of $30,000 a year before they purchase long-term care insurance.

    What should you consider when choosing which long-term care insurance plan is best?

    It is important to talk to an insurance agent who has a wide variety of long-term care options as this type of insurance is not a one-size-fits-all package. Key factors such as the dollar-per-day benefit, duration of coverage and whether or not the policy is inflation protected to ensure your daily allowance keeps pace with the dollar’s real value need be taken into consideration.

    Is this the complete coverage answer?

    The typical long-term care insurance policy provides coverage of $50 to $200 a day for care, whereas a typical nursing home stay can range anywhere from $100 a day to $400 a day. As such, owning a long-term care policy does not mean you can stop saving for retirement. A quick run of the math reveals a gap between what you have and what you need. Additionally, many policies have a deductible which often is correlated to days and not dollars and may require you to cover the cost of a stay of 120 days or less out of your own pocket. Therefore, it is critical to understand the benefits and costs of a policy completely before purchasing one.

  • 4. Dependent Care Account:

    Another option to defer costs for long-term care is a dependent care flexible spending account. A dependent care FSA allows you to defer a maximum of $5,000 in pre-tax income each year to cover certain expenses for eligible dependents, which include any dependent children under age 13 or any person living with you claimed as a dependent and who is physically or mentally incapable of self-care, such as an elderly parent.

    Eligible expenses include the costs of adult day care (does not include overnight and nursing home facilities); day care and housekeeping services provided in your home for a qualifying dependent; day care provided outside of the home, preschool or summer day camp; and food supplied by a day care.

    Mintco Financial has helped thousands of individuals plan for long term care.

    If you are interested to have more information please fill the contact form or fill the quote form.

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