How Much Do You Really Know about Long-Term Care?
Separating some eldercare facts from some eldercare myths.
How much does eldercare cost, and how do you arrange it when it is needed? The average person might not know. For clarification, here are some facts to dispel some myths.
True or false: Medicare will pay for
your mom or dad’s nursing home care.
FALSE, because Medicare is not
long-term care insurance.1
Part A of Medicare will pay the bill for up to 20 days of skilled nursing facility care—but after that, you or your parents may have to pay some costs out-of-pocket. After 100 days, Medicare will not pay a penny of nursing home costs—it will all have to be paid out-of-pocket, unless the patient can somehow go without skilled nursing care for 60 days or 30 days including a 3-day hospital stay. In those instances, Medicare’s “clock” resets.2
True or false: a semi-private room in a nursing
home costs about $35,000 a year.
FALSE. According to Genworth Financial’s most recent
Cost of Care Survey, the median cost is now
$85,775. A semi-private room in an assisted living facility
has a median annual cost of $45,000 annually. A
home health aide? $49,192 yearly. Even if you just need
someone to help mom or dad with eating, bathing, or
getting dressed, the median hourly expense is not
cheap: nonmedical home aides, according to Genworth,
run about $21 per hour, which at 10 hours a week
means nearly $11,000 a year.3,4
True or false: about 40% of today’s 65-year-olds
will eventually need long-term care.
FALSE. The Department of Health and Human Services
estimates that close to 70% will. About a third of
65-year-olds may never need such care, but one-fifth
are projected to require it for more than five years.5
True or false: the earlier you buy long-term care
insurance, the less expensive it is.
TRUE. As with life insurance, younger
policyholders pay lower premiums.
Premiums climb notably for those
who wait until their mid-sixties to buy
coverage. The American Association
for Long-Term Care Insurance’s 2018
price index notes that a 60-year-old
couple will pay an average of $3,490 a
year for a policy with an initial daily
benefit of $150 for up to three years
and a 90-day elimination period. A
65-year-old couple pays an average of
$4,675 annually for the same coverage.
This is a 34% difference.6
True or false: Medicaid can pay
nursing home costs.
TRUE. The question is, do you
really want that to happen? While Medicaid rules vary
per state, in most instances a person may only qualify
for Medicaid if they have no more than $2,000 in “countable”
assets ($3,000 for a couple). Countable assets
include bank accounts, equity investments, certificates
of deposit, rental or vacation homes, investment real
estate, and even second cars owned by a household (assets
held within certain trusts may be exempt). A
homeowner can even be disqualified from Medicaid for
having too much home equity. A primary residence, a
primary motor vehicle, personal property and household
items, burial funds of less than $1,500, and tiny life
insurance policies with face value of less than $1,500
are not countable. So yes, at the brink of poverty, Medicaid
may end up paying long-term care expenses.4,7
Sadly, many Americans seem to think that the government will ride to the rescue when they or their loved ones need nursing home care or assisted living. Two-thirds of people polled in another Genworth Financial survey about eldercare held this expectation.4
In reality, government programs do not help the average household pay for any sustained eldercare expenses. The financial responsibility largely falls on you.
A little planning now could make a big difference in the years to come. Call or email an insurance professional today to learn more about ways to pay for long-term care and to discuss your options. You need to find a way to address this concern, as it could seriously threaten your net worth and your retirement savings.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate; however, we make no representation as to its completeness or accuracy. Please note: investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
Citations.
1. medicare.gov/coverage/long-term-care.html [6/5/18]
2. medicare.gov/coverage/long-term-care.html [6/5/18]
3. fool.com/retirement/2018/05/24/the-1-retirement-expense-were-still-not-preparing.aspx [5/24/18]
4. forbes.com/sites/nextavenue/2017/09/26/the-staggering-prices-of-long-term-care-2017/ [9/26/17]
5. longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html [10/10/17]
6. fool.com/retirement/2018/02/02/your-2018-guide-to-long-term-care-insurance.aspx [2/2/18]
7. longtermcare.acl.gov/medicare-medicaid-more/medicaid/medicaid-eligibility/financial-requirements-assets.html [10/10/17]
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