Some adults might not have considered what could happen one day when they’re older, possibly ill or injured, living on a fixed income, and unable to care for themselves. Who will care for us, and how will we afford to hire a caretaker, if we need one? Just as many of us have taken steps to plan out and even prepay for our end-of-life funeral arrangements, it’s important to set aside resources for the long-term care (LTC) we will need in our golden years, including hospice care.
Planning for LTC
- More than half of seniors over age 65 will need LTC for two or more years.
- LTC is usually custodial care, which refers to daily, non-medical care, but it can also include medical care by a skilled nurse. LTC can be provided in the home, in a day facility, in an assisted living or nursing home, or in a hospice facility.
- Non-medical professionals or family members can act as caretakers.
- Skilled nurses can provide medical LTC in a skilled nursing facility (nursing home).
- Assisted living is another option for LTC, and it usually involves non-medical custodial care in a facility rather than the elderly patient’s home.
- Those with Alzheimer’s and dementia will require memory care, which is a different category of LTC.
- If your family has a history of hereditary diseases or you show early signs of conditions like Alzheimer’s, you may be more likely to need LTC.
- Your lifestyle can impact whether you will need LTC. A high-risk lifestyle that’s prone to illness and injury has a higher chance of future physical or mental impairment, requiring the need for long-term care.
Paying for LTC
- The average LTC cost of $172,000. Add the 70 percent of your current income you’ll need to live comfortably in retirement, and the dollar signs can start to get overwhelming. Since some workers are starting late, don’t have extra income to save for the future, or are already close to retirement, savings alone won’t cut it.
- Medicare doesn’t cover LTC in many circumstances. It only covers 100 days at a nursing home after you’ve spent three days in the hospital. Custodial care doesn’t fall under Medicare. Medicare hospice benefits vary based on your illness and your plan, but typically does not cover room and board or services unrelated to a terminal illness.
- Medicaid will pay for LTC when the patient has less than $2,000 in assets.
- Private medical insurance might not even cover LTC.
- Long-term care insurance (LTCI) is a great option to pay for care when the time comes. You start paying premiums while you’re healthy and working. Then when you’re in need of LTC, the insurance kicks in.
- By getting LTCI while younger, you can save money. A good time to start is in your 50s when you’re close enough to retirement to need to plan for it but still young enough to amass a solid amount through premiums. At age 65, premiums go up 8-10 percent.
- You can pay more for hybrid LTC policies that return unused amounts to your heirs and don’t raise the premiums.
Other options to help pay for long-term care
- Selling a life insurance policy, also known as a life settlement, can help pay for daily living expenses and medical care. With a life settlement, you sell your life insurance policy for less than the payout.
- Investment tools such as annuities can have long-term care riders attached to them.
- Personal savings are the most direct way to pay for LTC without paying a premium, interest, or going into debt. But you’ll need to save early to add LTC costs on top of retirement costs.
- You can leverage your assets to pay for LTC. Refinance your home, take out a reverse mortgage, or borrow from your 401K.
As you age, you might find yourself falling ill or getting injured, and independence is no longer in the cards for you. You might need help getting dressed, bathing, cooking, cleaning, running errands, and taking medication. Long-term care exists for that reason. Put a plan in place now so you’ll have options when the time comes.
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