PLANNING FOR THE COSTS OF LONG-TERM CARE

Today our population is aging faster and living longer. According to the U.S. Department of Health and Human Services, the average 65-year old today has a 70% chance of needing long term care at some point in their lifetime. Most use it for about two years but 20% need it more than five years. These costs can be quite significant and vary depending on the amount of care needed but annual costs can top $100,000/year.

Will you be ready to cover these costs? And how long will you need this care? Most health insurance does not cover costs for long-term care. And Medicare does not cover long-term or custodial care either. Medicaid provides help for low-income families, but this is generally available only after completely exhausting their life savings. So those without long-term care insurance pay these expenses out-of-pocket.

Long-term care insurance can be expensive. According to the American Association for Long-Term Care Insurance (AALTCI), on average a 55-year-old man in the United States can expect to pay over $2,000 per year in premiums. And premiums increase with age and vary based on age, health and specifics to the policy.Long-term care usually involves needing assistance with typical tasks like eating, bathing and moving around which are termed activities of daily living (ADLs). Long-Term care insurance policies generally reimburse for these services done in your home, an assisted living facility or nursing home.

Long-term insurance does not cover costs of medical care. Those typically fall under regular health insurance or Medicare. And pre-existing medical conditions may not be covered during an exclusion period. It is important to track with what a policy covers and what it does not because each carrier sets its own rates and underwriting standards. Be sure to shop around.

Since most people will need some form of long-term care, it is wise to consider how to pay for these additional costs. A long-term care policy is a viable option. Another is to boost retirement savings to ameliorate long-term care costs.

Remember, we are always available to discuss your financial goals.