November in our industry is known as long-term care month and with the turning of the calendar to a new year, I thought I would incorporate that thought to give some of you an idea for your resolution.
When we run a financial/retirement plan for a client, a common problem we run into is that while the client’s situation is set to meet their goals, if the client and/or their spouse had an extended stay in a long-term care facility, that alone could really wreck their long term goals. Depending on the level of care needed, average costs in Nebraska a 4,000-6,000/month for care in a facility. According to the Department of Health, 7 in 10 people that reach the age 65 will probably need some level of care in their lifetime. Now that does not necessarily mean care in a facility like a nursing home or assisted living facility, but if it is, the question arises of “How do we pay for it.” Some clients think Medicare will pay for it. While this is partly true, it is not true for an extended stay. Medicare will pick up days that are used for rehab after a hospital stay and not any more than 100 days. Medicaid will come in and pay only after you have exhausted all your other resources. The same question comes up again.
One common way to help alleviate that cost is through traditional long-term care insurance. There are many ways to structure these products from how much you want the policy to payout per day or month, how many years do you want it to pay, how many are you willing to pay for before it starts (elimination period/deductible), and would you like the benefit to increase with inflation. These policies will pay for all long-term care expenses including but not limited to home care, adult day care, assisted living facilities, and of course nursing homes. While these plans are the most common we deal with, some clients don’t like them do to the fact that they work like your property insurance where if you don’t have a claim, you don’t getting anything back from the insurance company.
Another way to cover it is though specialized life insurance policies. These policies will pay for the same care levels mentioned before, but if you do not use them for care, your beneficiaries have a death benefit paid to them. These types of plans seem to become more popular in my office as the time goes on. Clients do not seem to mind these premiums as much since they know they will either be able to get some money out of the insurance company for their care or their heirs will.
Whether any of these plans make since for you and your situation is something, we would be glad to help you with in making that decision. If paying for your future care is a concern you currently have, then make your New Year’s resolution to come in a visit with us to explore the options available to you.
Happy New Year
Tyler Williams
This is meant for educational purposes only. It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions. (12/20)