What is long-term care?

Many people associate long-term care with the elderly, however it applies to the ongoing care of individuals of all ages who can no longer independently perform basic activities of daily living—such as bathing, dressing, or eating—due to an illness, injury or cognitive disorder. This care can be provided in a number of settings, including private homes, assisted-living facilities, adult day-care centers, hospices and nursing homes.

Medicare

But won’t the government look out for us? Unless you have first been in the hospital for three consecutive days, Medicare pays nothing towards nursing home care. If you have been in the hospital, Medicare will only pay if you enter a certified nursing home within 30 days of your discharge. Once in a nursing home facility, Medicare will pay 100% of the costs for the first 20 days. After that, you will pay the first $170.50 per day in 2019 for your care through day 100 and Medicare will pick up the balance. Beyond day 100 in a nursing home, Medicare does not pay anything.

Medicaid

Medicaid covers long-term nursing home costs but only for individuals who have low income and few assets. You will have to exhaust most of your savings before you qualify for Medicaid. Once you qualify for Medicaid, you will have little or no choice regarding where you receive care. Only facilities with Medicaid-approved beds can accept you.

Long Term Care Insurance

If you want to retain your independence, protect your assets and maintain your standard of living while at the same time guaranteeing your access to a range of long-term care options, you may want to consider purchasing long-term care insurance. This insurance might be right for you if:

• You are between the ages of 40 and 65
• You have significant assets you want to preserve as an inheritance to your beneficiary(ies)
• You have income from employment or investments in addition to Social Security
• You can afford the premiums now and in the future

If long-term care insurance is not right for you, you could use personal savings to pay for care. Keep in mind, however, that if you do choose to “self-insure,” there is always the chance that your savings will not be enough to cover your actual expenses.

Life Insurance

If you have a cash value life insurance policy, you may be able to access the cash value to help you pay for care. Policies with an accelerated benefits rider may give you an option to sell your policy to a viatical settlement company. You will typically get 40 to 85 percent of the policy’s face value from a viatical settlement.

Reverse Mortgage

If you own your home or have a lot of equity in your home, you could consider a reverse mortgage. A reverse mortgage allows you to receive either a lump sum or monthly payments based on the current value of your home, while the lender holds a lien on your home. The loan is typically not repaid unless you sell the home. Please note, a reverse mortgage may complicate matters if you plan to leave your home to your heirs.

The longer you live, the greater the chances you may need some form of long-term care. If you are concerned about protecting your assets and maintaining your financial independence in your later years, let us help you put together the strategy that works best for you.