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.
“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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