Thinking about who will care for us as we age is similar to estate planning. It’s something we all know we should do, but it’s an easy topic to avoid. By planning ahead, you can help your family avoid the unnecessary angst in making decisions on your behalf and preserve your retirement assets.
According to a 2008 Cost of Care Survey by Genworth Financial, if you choose to self-insure and live in Ohio, be prepared to pay an average of $173 per day for a semi-private room in a nursing home, $2932 per month for assisted living, or $14,040 annually for a home health aide to come into your house three times a week for five hours each visit.
Purchasing long term care insurance is another option. It is important to purchase coverage when you are healthy so you are eligible for coverage and your premiums will be lower. My father learned this lesson the hard way. He is a retired civilian engineer with the Air Force. Several years ago the government offered long term care insurance to employees and retirees with no medical underwriting if they signed up during the initial enrollment period. Because his parents were in their 80’s and in good health and he had no medical issues, he ignored my recommendation to sign up for the plan. Within a year he was diagnosed with rheumatoid arthritis. He then tried to apply for the plan and was declined. Ironically, my 97 year old grandfather just passed away in January after spending the last 4 months of his life in a nursing home.
Many people live into their 80’s and 90’s today. This is precisely why you need to make sure you have a plan to cover any treatment you may need whether at home or in a nursing home. Medicare does not pay for custodial care, which is non-medical help you may need with things like bathing, dressing or meal preparation and Medicaid will only cover custodial care in a nursing home.
The recently passed health care legislation does have a provision called The Class Act which created a federal long term care insurance program available to individuals through their employers beginning in January, 2011. This may be the best option for currently employed individuals who are unable to obtain private coverage due to their health. The plan will provide a daily cash benefit which can be used to purchase the assistance needed such as in-home care.
Whether you choose to self-insure or purchase protection, the most important thing is to make sure that you have a plan in place.
Chris Carleton, CFP®
clcarleton@taaginc.com
http://www.taaginc.com/
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You are exactly right, Chris. I was a nursing home administrator in Kentucky until 2006 and have therefore seen hundreds of financial horror stories firsthand.
ReplyDeleteBut what may be the most beneficial aspect of LTC insurance is that it provides the insured person with more options. When taking a look at the cost figures you cited above, it's plain to see that home care generally costs MUCH less than institutional care in a nursing facility. Having Long-Term Care Insurance from a reputable company means you have their power behind you offering whatever means they can to keep you at home. Of course they are...it's in the company's best financial interest for you to receive care at home.
Since most of us would strongly prefer home care vs. facility care, doesn't it make sense to have them on your side trying to keep you well-cared-for in your own home for as long as possible?
Excellent job pointing out a too-often overlooked opportunity that LTC insurance provides.