Only a small percentage of Americans plan for a long term care need, but it is the single biggest threat to your retirement! We encourage EVERYONE to have a long term care plan. For some, that is to self insure, using their own assets to pay for care. Those without money will qualify for Medicaid. However, those who may not be wealthy (but certainly are not poor) are the ones who put their family at the greatest risk.
Notice that we didn't say "put their assets at the greatest risk." That is secondary. No reasonable person disputes that we are living longer. Therefore, the probability of needing some form of long-term care is quite high. At some point you may require assistance with everyday activities or need supervision due to a cognitive impairment. The cost of providing that care often leads to a severe strain on a family's finances because of the lack of other options.
Medicare, pays only for skilled or rehabilitative care, not custodial care. Veterans believe that the VA will pay for home care, adult day care, or assisted living. Funding is limited and generally based on service-related disability. The federal government has even communicated this message to veterans by encouraging them to purchase long-term care insurance through the new Federal Long-Term Care Insurance program.
Long-term care insurance (LTCI) has two roles: it helps keep families together and allows your retirement portfolio to execute for the purpose for which it was intended, namely retirement. Who will be providing your care? Whether you like it or not, your children will play a key role. However, LTCI allows children to remain your children, supervising your care rather than becoming your caregiver.
From a purely financial perspective, LTCI allows your retirement plan to stay intact and protects income. It also protects your freedom of choice as to where, when, and how you receive care.
When buying coverage, choosing a long-term care specialist is critical. Consider their training, educational credentials, and commitment to help solve your long-term care needs. The key is whether they talk about a plan or a product first. If they are interested in the plan you are dealing with a professional. If their initial presentation centers around product and price, consider getting a second opinion.
When most people hear the phrase “long term care” they equate it to “nursing home insurance.” At Hackett Retirement Solutions we refer to it as “anti-nursing-home insurance.” In fact, most long term care today is provided outside of nursing homes by family and/or friends. Good policies provide for in-home care designed to keep you out of the nursing home.
Charles Hackett has earned the designation "Certified in Long-Term Care" or CLTC, after completing a rigorous multidisciplinary course focused on the profession of long-term care. He can be reached through Hackett Retirement Solutions & Insurance, Inc. at (978) 499-9400 or by e-mail at charles@hackettretirement.com
Georgetown University’s Long-Term Care Financing Project 2007 found that 10,000,000 Americans need costly long-term care. The study shows that Americans average $70,900 a year for a nursing home room, $25 a day for a home health aide, and $33,000 per year for a private room in an assisted living. See the January 2007 Fact Sheet for the national percentage of spending for long-term care by Medicaid, Medicare, privately out-of-pocket, and from other private and public sources.
Click here to find a helpful guide to long term care insurance from the Health Insurance Asso. of America.
