It is alarming how many people need long term care at some point in their life. Long term care is loosely defined as care provided when two or more basic living functions (eating, dressing bathing, etc.) require the aid of someone else. This aid is not necessarily trained, or professional, and does not always require a certification or degree.
When it comes to long term health care, many Americans incorrectly assume that Medicare, supplemental policies or standard health insurance policies will cover the expenses. Unfortunately this is very untrue. In fact, even government programs like Medicaid and Medicare do not cover much, if any, of long term care.
However, due to this assumption, all too many people do not plan ahead financially to provide for their care in the event of infirmity or extended illness.
While this care does not have to be professional, it is often draining, and depressing to family members, and outside help is sought. Also, even if no certification is required, the cost of care is expensive. Costs of services provided by a nursing facility can exceed $50,000 annually, or more than $4,000 per month. Costs for residing in an assisted living facility average $24,000 annually, but can cost much more in urban settings or if a resident needs a high level of services. So, as you can see, even for lower levels of need, the costs are higher than a normal person can pay on their own, especially for extended periods of time.
As these figures show, paying for long term care calls for financial planning for your health needs, especially as you approach retirement. Let’s look at a few of your options:
1. You can purchase long term care insurance: long term care insurance is a viable option, but is not for everyone. Often times even with long term care insurance, not everything is covered and the leftover expenses are more than a person can handle on their own. The basic guidelines for whether or not to purchase long term care insurance are as follows:
a. Establish a possible need, (Do you have diabetes that may lead to more severe problems? Do you have a family history of needing long term care? Do you currently struggle to perform some daily living tasks?) If yes, then long term care would be a wise investment, if no, it may be an expensive way to prepare for the worst that will never happen.
b. Find a policy that makes sense to you. This means make sure you can afford the premium now, and in the future. There is no sense buying long term care insurance if you won’t be able to afford it until you need it. So consider your financial situation, and consider whether or not you will have a fixed income, and what the premium for LTC insurance mean to your financial lifestyle. Also find a policy that has a payout amount that is beneficial, and high enough, to have it make sense.
c. Consider other options as well. If you are 60 when you buy it, and you pay into it for 20 years before you need it, you will likely put $30,000 into it, so what is the likelihood you will use it enough to make it worth while.
2. You can save money and pay out of pocket. This is not a wise way to go if you are highly likely to need long term care, however, should it be a remote, or somewhat remote possibility, you may find that simply depositing the equivalent of a premium amount into an account each month will better suffice for you.
3. Medicare. Medicare will cover a limited amount for a limited time period, and only if you show financial need, so do not rely on this as a way to pay long term care expenses, but if you qualify for it, and need long term care, be sure to utilize it.