CFP®, RFC, CSA
Senior Financial Advisor
With health care costs rising and longer life expectancies, determining how to pay for long term care needs is an increasing concern for many Americans, especially seniors. According to a Genworth Financial's 2007 Cost of Care Survey, the average annual cost of nursing home care is $74,806. For those of us in San Diego the cost is north of that figure.
But doesn't Medicare cover the cost? Some people assume that the government will pick up the tab, but Medicare covers only 20 days of skilled nursing home stays. Medicare will help supplement the cost of days 21-100 in a skilled nursing facility, however, a daily co-payment of $128 (2008) is charged. Oh, and by the way, in order to receive any Medicare coverage, you will need to have spent a minimum of three days in the hospital.
Is long-term-care insurance right for you? We cannot predict the future but we can try to assess the likelihood of needing some form of long-term-care. Looking back on your family history can be a good predictor of the future. How long did your parents and grandparents live? Is there a family history of chronic illness? Is there someone who is willing and able to care for you if the need arises?
The facts of the matter are, the average nursing home stay is 2.4 years, and one third of the population 85 and older is in a nursing home of some sort. According to the U.S. Department of Health and Human Services, about 9 million Americans 65 or older will require long-term-care this year. HHS expects that number to increase by 25% to 12 million by the year 2020.
For married couples long-term-care is particularly important. The chronic illness of one spouse can drain the physical and emotional well-being of the other and deplete family finances. Often times this leaves the surviving spouse without the resources to provide for their own well-being. Fortunately for married couples long-term-care insurance can be purchased at a substantial discount.
When will long-term-care insurance kick in? Benefits are typically triggered when a person can no longer handle at least two "activities of daily living", (bathing, dressing, eating, moving back and forth from a chair to a bed, using the bathroom and remaining continent). If two or more of these ADL's are expected to last for 90 days or more the insurance policy will kick in. However, a mental impairment alone can trigger the insurance.
The good news! As competition increases, premiums are decreasing, which makes long-term care insurance more affordable. In addition, some new policies allow for an informal caregiver to receive payment such as a friend or family member.
If you would like more information or a complimentary book on purchasing long-term-care. please contact 760-705-3517.