68% of seniors over 65 will require Long Term Care. Are you prepared to pay $250 Per Day?
Long Term Care....Does it still make sense?
Nearly 70% of people age 65 today can expect to receive some form of long-term care, with 20% needing it for five years or longer.
If you knew there was a 70% chance of something bad happening to you in life, would you try to protect yourself against it? You probably already protect yourself against far less likely scenarios, such as getting into a serious car crash or having your house catch fire. It makes sense that you would protect yourself from the financial consequences of needing long-term care as well. You don’t want to be a burden on your children or see your financial security wiped out along with the college fund you were hoping to setup for your grandchildren.
In 2015, the average annual cost of a private room in a nursing home was about $91,000 per year. Alternatively, if you don’t need the intensive care of a nursing home, you may instead end up in an assisted-living center paying on average about $43,000 per year. Another option would be to receive the care you need in your own home. If that were the case, you would have to pay, on average, $20 per hour for a home health aid worker to visit you. If you needed 30 hours per week of assistance, you would end up paying about $31,000 per year.
These expenses could go on for two, three, five years, or more and amount to hundreds of thousands of dollars. Are you prepared to cover these costs with little or no notice? Do you want to be a burden on your children or grandchildren?
What About Uncle Sam?
Most people find themselves in need of long-term care when they are over age 65 and retired. That means, when the time comes, they will most likely be receiving health insurance coverage from Medicare. The Medicare program is funded by the federal government. Unfortunately, Medicare provides only modest long-term care support—100 days. It is structured to cover only short-term services for conditions that are expected to improve so you can return home. Additionally, Medicare pays only for “medical acute care,” which is restricted to doctor visits and hospital stays. This means the largest, and often most essential, part of long-term care, such as help with bathing, feeding, and getting around the house are all left to you and your family to arrange and pay for.
Medicaid is the other publicly-funded program that can help pay for long-term care. It is a joint federal/state program that provides medical care to people in financial need. The good news about Medicaid is that it is structured to provide the kind of long-term care most people need, going beyond the medical acute care Medicare is restricted to. The bad news is that Medicaid can only be tapped after you have diverted most of your income to the long-term care provider, as well as spent down your countable assets to as low as $2,000.
Don’t Look Back: Giving It Away Instead of Spending Down
You may be wondering why you can’t just transfer your assets to your kids or grandkids if you need long-term care, then qualify for Medicaid. The problem is the five year look-back penalty. Most transfers made within five years of applying for Medicaid will count against your eligibility even though you no longer own the assets. You will be subjected to a penalty period. Here’s how it works: Suppose three years ago you transferred $90,000 to your grandchildren to help pay for college tuition. This year, you are diagnosed with Alzheimer’s disease and enter a nursing home. You meet the income and asset limits for Medicaid, but you will be disqualified since the $90,000 transfer occurred during the five year look-back period. Only transfers made beyond five years will not have an impact on your Medicaid application.
The rules of Medicaid eligibility are complex and have slight differences from state to state, but all require you to prove an immediate financial need before you are allowed to participate in the program. The program was designed to help only those with severe financial hardship, so you have to practically exhaust your savings in order to become eligible. You can think of Medicaid as an insurance policy that kicks in when you have spent everything else. For most people who have spent their lives saving for retirement and to pass something on to the people they love, this won’t provide the peace of mind they need.
You are left with only two other possible methods of paying for long-term care services:
• Paying out of your pocket
• Paying through an insurance policy
Given the option, most people would prefer filing an insurance claim versus losing a significant portion of their life’s savings. Call SafetyNet Insurance Group today for some innovative ideas on how you can add this coverage without breaking the bank!