Long-term care planning requires teamwork between the baby boomer planning to retire and the industry expert with all the necessary data. In order to establish a good long-term care plan that will stay comprehensive and reliable even after decades, soon-to-be retirees ought to consult with industry professionals and allow them to guide in planning.
However, whether you are planning for your own long-term care or assisting a loved one in establishing one, you should always make it a point to do your research about long-term care coverage. This may include reading about the benefits of long-term care insurance or the advantages of life insurance with a long-term care rider. In doing so, you get to boost your health literacy and become more involved with your own future care.
To help you prepare for your future needs successfully, we have contacted several long-term care planning experts and asked them the following:
Before we move further along with their answers, however, we would also like to share this downloadable Shopper’s Guide to Long-Term Care Insurance PDF ebook. Here, you can find the different aspects of planning and preparing for care, as well as read up on the strategies you can use after being denied a plan. This will help guide you in keeping up with the complicated world of long-term care.
Long-Term Care Planning Tips from the Industry Experts
Now, let us take a look at what the experts have to say about long-term care planning.
One risk to your retirement that is often underestimated is the very high cost of long-term care both now and in the future. Even with substantial savings, those costs can completely eliminate a couple’s net worth. [However], there are more options today in the long-term care market than ever before.
Until recently, the strategy to cover those costs was based on a type of health insurance where the premiums could go up and, if no care was needed, the premiums were lost. Now, there are a range of products where premiums could stay the same and, if long-term care is not needed, the client can retrieve the funds they have put into the product. Different providers offer these two features in different ways. As a result, we can choose a plan that meets the personalized goals of each of our clients.
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When talking about long-term care planning with my clients, I address their four options:
- Transfer a portion of the risk to an insurance company by purchasing long-term care insurance,
- Rely on family or friends to help either financially or with care, or
- Medicaid (MediCal in California).
It’s a common mistake to believe Medicare covers long-term care; it does not. Options #3 and #4 are not pre-planning strategies, and relying on family or friends for money or care is becoming a burden to them. To qualify for Medicaid, you basically have to be destitute. Additionally, President Trump recently proposed a budget cutting Medicaid spending.
In order to self-insure (option #1), you need a pretty substantial net worth. This is why looking at long-term care options is extremely important for Baby Boomers. Hybrid products (such as life insurance with long-term care insurance) are becoming more popular and could also be a good option.
I recommend Baby Boomers work with both a CFP® professional and a long-term care insurance agent to review all options to see if long-term care insurance is right for them. A CFP® professional can help you determine if there is a need for long-term care insurance, and how much. They can also help you collaborate with an insurance agent who specializes in long-term care insurance to review all policy options in detail and ensure you are purchasing a policy from a reputable and highly rated insurer.
Three of my favorite tools when considering long-term care insurance include:
- American Association for Long-Term Care Insurance
- Genworth’s online tool to compare the cost of care, and
- I feel it is also really important to familiarize yourself with what Medicare covers (and does not cover such as long-term care).
- Where you live matters and your ability to stay at home depends on the layout of your home, especially the bathroom and whether it can be modified to accommodate a wheelchair or other device equipment if necessary. Is Your Home ‘HomeFit’? Is a helpful checklist for older adults to review to ensure your home provides a safe environment to age-in-place.
—AARP, Is Your Home ‘HomeFit’?
- How age-friendly is your community—does it offer public transportation, home delivered meals, or other needed services? It is wise to think about whether or not your current and future community will support your needs, your age, and any required long-term care services.
- Obtain advance directives which refer to a living will and a power of attorney for health care. The day may come when you will be too ill or confused to make medical decisions. It is important to take care of this while you and your spouse are still competent. A helpful website to download state-specific forms is caringinfo.org.
Payingforseniorcare.com helps individuals, families, and caregivers locate information about long-term care resources to understand financial options if you should need assistance in covering the cost of care.
The Federal Long-term Care Insurance Program website has useful tools to determine if long-term care insurance is right for you:
- Online Consultation walks you through an interactive tool of the design plan process of real life cases,
- Cost of Care tool helps you find long-term care costs in your area for home health assistance, assisted living and nursing home care, and a
- Self-funding Tool to calculate how much money you will need to save by the time you anticipate needing long-term care.
It’s never too early to start planning for long-term care, even though there’s no way of knowing if you’ll need it. The U.S. Department of Health and Human Services expects the duration and level of long-term care to change over time. But it says there’s a nearly-70% chance that a 65-year-old will need some type of long-term care at some point, and some people will need it for more than five years.
Planning ahead will help you learn about the long-term care services in your area and the potential costs. It may also help parents make important decisions. Together, you may need to make health, housing, financial and legal decisions. People with signs of Alzheimer’s disease or dementia should start planning for long-term care as early as possible.
Time is of the essence. Learning more about and applying for coverage the soonest time possible will prove to be beneficial for one’s future.
- Medicare Supplement Insurance – this helps pay for out-of-pocket costs not covered by Original Medicare Plans. Hospital bills tend to pile up, so a supplement will definitely provide one the peace of mind needed during the golden years.
- Life Insurance – particularly one with a long-term care rider, for this may offer a safety net when facing expected custodial care in the future.
- Individual Retirement Accounts (IRA) – for big tax breaks, consider applying for an IRA. Of course, an individual needs to consider which IRA to get to maximize the benefits (for example, a Roth IRA, which is funded by tax dollars, gives one the advantage of contributing even after retirement, plus tax-free growth and withdrawal of funds.)
Long-term care has costs associated with the services provided. It’s important to prepare as much as possible. The cost of care and your options for coverage vary depending on your state and the type of services you need. As you meet with various providers, make sure to ask about their costs, billing practices, and if they accept any assistance programs. But first, it’s important to understand your options in financing your long-term care.
A common myth is that Medicare, the federal government’s health insurance for Americans aged 65 and older, pays for long-term care—but it doesn’t. Medicare will help pay for a short stay in a skilled nursing center, for hospice care, or for home health care if you meet specific conditions. But it does not cover what the government calls “custodial care,” or personal care for assistance with daily activities (e.g., bathing, dressing, eating).
Medicaid, the health insurance program for low-income individuals, does cover long-term care services. However, Medicaid programs and eligibility for services vary from state to state. Contact your state Medicaid office to learn more, or ask a long-term care provider who accepts Medicaid for more information
If you don’t qualify for Medicaid, there are private pay options such as long-term care insurance, which experts recommend should be purchased in your mid-50s. Life insurance and your personal income and savings are other options to pay for your long-term care. Talk with insurance agents, perhaps a financial advisor, and loved ones to begin planning.
Finding the Perfect Plan that Suits Your Needs
Finding coverage may take a lot of effort, and it can be overwhelming at times. However, nothing compares to the peace of mind that comes with knowing that your health, assets, and family members are safe and sound from the disadvantages of high care costs. After all, many of you would agree the biggest part of finding contentment in growing older is maintaining the freedom to choose for yourself. People want to stay independent as they grow older, and they can only truly achieve this with careful planning.
You may not be able to fully control the chances of needing care as you grow older, but you can take hold of what comes after.
Be in control of your care needs as early as you can. Learn as much as you can, and talk to the experts. Lastly, be sure to seek coverage now by requesting instant long-term care insurance quotes.