This month’s topics: Long-Term Care Planning Monthly Blog Roll Surviving Difficult Times
What is Long-Term Care (LTC) Assistance? Long-term care assistance comes into play when people are unable to care for themselves because of cognitive impairments (e.g., Alzheimers) or physical impairments. The key determinant for physical impairments is the ability to perform the Activities of Daily Living (ADL) to a specified level of proficiency. The Six ADLs are: 1. Bathing; 2. Eating; 3. Toileting; 4. Transporting; 5. Incontinence; and 6. Dressing.
Most people think of the elderly when considering LTC; however, 37% of people requiring long-term care assistance are under the age of 65.
How is LTC Assistance Provided? There are several types of care: Skilled Care – daily 24 hour nursing care, Intermediate Care – occasional nursing care, and Custodial Care – providing assistance with the ADLs.
Care can be provided in the Home (Home Health Care) by a friend, relative or professional, or at a Nursing Home, Adult Day Care, or Assisted Living facility. LTC assistance can also entail Hospice care provided in someone’s home or in a hospice facility. Many nursing homes today provide several levels of care within one facility. People with diminishing health and spouses who may require different levels of care find these multi-level care facilities to be a good fit for their changing needs. Many nursing homes today provide nice home environments that are not institutional, making the change from independent living much more comfortable.
How much does LTC cost? The average cost for LTC today for a private room in a nursing home is $6,266 per month, according to AARP. The average stay can easily be 2–3 years, at a cost of more than $225,000.
How is LTC paid? Health Insurance
Private Major Medical Health Insurance (group or individual): Provides little to no benefits.
Government Benefits Medicare: Health insurance for people over 65, or for anyone with certain disabilities, provides for care in a skilled nursing facility for 100 days following a 3-day stay in a hospital. After 100 days there is no coverage.
Medicaid: Welfare-type benefit for those with a very low income or little to no assets.
Veteran’s Affairs: Long-term care for service-related disabilities or for certain eligible veterans.
LTC Insurance Individual Long-Term Care Insurance: Individual policies to provide various levels of care up to benefit limits. Group Long-Term Care Insurance can be provided through employers, funded with group rates and through payroll deduction. Qualified LTC Insurance may provide tax advantages on the premium and tax-free benefits. Some states offer “Partnership Policies” that shelter some of your assets should you require some assistance from Medicaid. Obtain several quotes from different insurance companies, and evaluate their history of rate increases, benefits, features, and company ratings (the agent should be able to provide this information); purchase only what you can afford. Consider various riders, including Cost of Living Adjustment (COLA), which increases your benefit each year prior to claiming benefits.
Life Insurance: Various riders on life insurance policies may provide funds for long-term care.
Personal Assets: Savings and investments until depleted are used to pay the costs, then Medicaid pays. Home equity can fund LTC through sale of the home or by the use of a Reverse Mortgage.
Long-Term Care Planning Financial planning should take into consideration one’s potential need for long-term care assistance. Your eFinPLAN financial planning report provides information regarding long-term care insurance. It is estimated that more than 60% of people over 65 will need long-term care assistance. As shown above, this care can be provided by family or institutions funded through assets, insurance or government.
Medicaid Planning? Government (e.g., Medicaid) has limited resources to meet the growing demand of our aging population. Qualification requires that individuals spend down their assets to $1,500 and have limited amounts of income. Married couples have different limits; they should seek qualified counsel if either spouse is applying for Medicaid-paid long-term care assistance. Change in the law makes it much more difficult to transfer assets in order to qualify for Medicaid.
As with all planning, seek the assistance of qualified professional trusted advisors prior to making decisions and implementing your financial plans.
Blog Role: Informative and Interesting Financial Blog Discussions At eFinPLAN.com, you will find “News Feeds” on the right side of the screen. These are interesting financial articles and blogs from around the Web that I think are useful. Go to eFinPLAN Blogroll to see the following and more:
How to Start Investing for Beginners from Moolanomy.com Reverse Mortgages: Advantages and Disadvantages from ChristianPF.com Personal Finance Six Common Financial Aid Mistakes to Avoid from FiveCentNickel.com Direct Stock Purchase Plans: A Better Way to Invest from GetRichSlowly.org Frugal Recession Links: Food, Travel, and Healthcare from MyMoneyBlog.com How to Weather an Inflationary Storm from FreeMoneyFinance.com Chase May Owe You a Refund from MoneyRulesDebtStinks.com Did Your Parents Give you a Whole Life Insurance Policy? Here's what to do with it from WiseBread.com Surviving Difficult Times More and more people today are facing difficult financial circumstances. Financial difficulty and layoffs can be one of the most stressful events to face. It can also end up being one of the best opportunities to make us stronger, help us to focus on what's really important and in the long run may lead us to pursue new and better opportunities. Do not isolate yourself - you are not alone. Use this time to expand your networks. LinkedIn.com may be beneficial. If you know someone who is going through a difficult time reach out to them. Invite them to your home for a meal, meet them at a coffee shop - let them know you care, encourage them, and try to help them in their job seach, perhaps through your network. The non-profit Consumer Credit Counseling Service has a nice guide to surviving a layoff.
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