Wednesday, March 27, 2019

Cost of nursing home care makes planning ahead crucial for financial security


Tamara Holmes, Special to USA TODAYPublished 12:01 a.m. ET March 4, 2019 | Updated 6:59 a.m. ET March 4, 2019
When former Wisconsin Gov. Martin J. Schreiberof Milwaukee was in his 50s, planning for nursing home care was the last thing on his mind. Luckily, a financial professional knew better.
“If it hadn’t have been for a pesky life insurance agent, I don’t know if I would have ever bought long-term care insurance,” Schreiber, now 79, says.  
When his wife Elaine, was diagnosed with Alzheimer’s about a decade later, he realized it was one of the best decisions he could have made. 
As the disease progressed, “it got to the point where I knew that I could not take care of Elaine anymore,” he says. His wife is also now 79.
The long-term care policy covers the cost of the nursing home where she’s lived for the past three years.
“The disease is hard and devastating enough without having to worry about the financial aspects,” Schreiber says.
Nobody wants to envision their golden years living in a nursing home, yet 56 percent of Americans between 57 and 61 will spend time in one in their lifetime, according to a 2017 study by the research organization the Rand Corp. Yet the costs can be prohibitive.  
The median cost of a semi-private room in a nursing home was $7,441 per month in 2018,according to the Cost of Care Survey by Richmond, Virginia-based long-term care insurance company Genworth Financial. To ensure that you have the most options, it’s important to plan ahead. 
Understanding long-term care
Long-term care refers to an umbrella of services designed to help you with activities of daily living, such as eating, bathing and dressing. Contrary to popular belief, these services aren’t covered by health insurance, Medicare or disability insurance
Medicaid does cover long-term care services, but to qualify, your income and assets can’t exceed levels set by your state. You can also buy long-term care insurance. Your other option is to come up with the money yourself, which can leave a family financially devastated. 
Tim and Gina Murray, founders of Aware Senior Care, an in-home care agency in Cary, North Carolina, have seen first-hand the toll long-term care services can take.
“It breaks our heart when a family needs the care but they don’t have the financial means,” says Tim, 59. That’s what prompted the couple to purchase long-term care insurance before they turned 60.  
“We have four grown children and we don’t want them to be burdened,” says Gina, 59. 
Exploring your financial options
When it comes to planning for long-term care, time matters. If you wait too long, long-term care insurance may no longer be an option since you can be denied because of health conditions.
“You can’t get long-term care insurance after a certain age – generally about 75,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance. Premiums are also higher the older you apply so the ideal time to apply is between 55 and 65, Slome says. 
There’s another reason why it pays to plan early.
Bottom of Form
“We’re seeing an increase in illnesses coming on at an earlier age,” says Jennifer Johnson, clinical director of CareScout, a Genworth subsidiary that helps families find care for their older loved ones. The average age of long-term care recipients in 2018 was 66, according to Genworth’s 2018 Beyond Dollars study.
If you’re ready to start your planning, experts offer the following advice.
Consider your unique needs
Ask yourself what you’d want your ideal long-term plan to be, says Johnson. Do you have a large family network that could provide informal care? Does your family have a history of illnesses such as dementia that require specialized care?  
Know the costs
While the median cost of private rooms in a nursing home is $8,365 per month, according to Genworth, the median cost at an assisted living facility is $4,000 per month and the median cost for home health aides is $4,195 per month. While you can’t predict how long you’ll need long-term care services, the average woman needs care 3.7 years and the average man needs it 2.2 years, according to the U.S. Department of Health and Services. 
Buy what you can
According to LTCG, an analytics firm supporting the long-term care insurance industry, the average cost of long-term care policies is $2,700 a year. However, this number would vary based on the age of the insured when the policy was purchased.
Policies vary in terms of how many years you have coverage and how much they will pay out per day. Even if you can’t afford enough coverage to pay for the worst-case scenario, “some coverage is always going to be better than no coverage,” Slome says.   
Consider your ultimate goals
Some people worry that they might be paying for something they might not use. Hybrid policies combine life insurance with long-term care insurance so if you don’t use it your beneficiaries will receive a higher benefit.   
With so many options, it’s helpful to sit down with a financial professional that you trust.
“You’ve got to make sure it’s right for you and for your family dynamic,” Johnson says

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