Is long-term care part of your long-term financial plan? – II
Last time, our blog discussed that many people are ambivalent about the prospect of long-term care. Specifically, the recent recession and the belief they’ll be healthy forever makes it less of a priority.
We also discussed how this might prove to be a mistake. The U.S. Department of Health and Human Services has found that nearly 70 percent of individuals 65 and up will likely require long-term care.
The question then becomes, how can people fund the potentially necessary long-term care?
Medicare/Medicaid
Medicare will cover skilled nursing services in a nursing home setting, but only for 100 days. Furthermore, it won’t cover the cost of long-term care services/home aide services. That’s because these are not technically considered medical services.
While Medicaid will cover long-term care, it won’t do so until the individual has used all other resources. In other words, when one is close to insolvency, a less than ideal situation.
Health savings accounts and self-insurance
A person might want to put funds in an HSA (Health Savings Account) or investment account to fund long-term care. If so, they are to be applauded for their diligence.
However, knowledgeable sources indicate that self funding long-term care will require a considerable amount of money. Indeed, one firm found the median monthly cost for a health aide in 2016 was $3,861 per month. It’s likely that these prices will only get higher in the next 20-30 years.
Long-term care insurance
Experts suggest that long-term care insurance is likely the most viable option. That’s because it will pay policyholders a predetermined amount to help cover the costs of daily living. They also note, that premiums are expensive and only increase with each passing year.
Another viable option, which we’ve explored in detail, is hybrid life/long-term care policy.
Hopefully the foregoing information has proven helpful in debunking misconceptions about the need for long-term care.
Source: USA Today, “Do you need long-term care insurance?” Wendy Connick, March 8, 2017