According to the U.S. Department of Health and Human Services, someone turning age 65 today will have a 70 percent chance of requiring some long-term care (LTC) service and support during the remainder of their life. In the case of women, the typical LTC need will last about 3.7 years compared to men who will need about 2.2 years of care. While approximately one-third of today’s 65-year-olds may not ever need long-term care 20 percent of those who do will require it for more than five years.
The statistics are clear; older Americans should be carrying a long-term care insurance policy to protect their future but only about 7.2 million Americans 65 years or older currently own a traditional long term care policy, and this number has held steady for the last seven years. While LTC insurance is overall considered expensive and finding the right plan for you in the myriad of insurance products available can be confusing and vary from state to state. According to A Place for Mom, there are seven myths about long term care that anyone age 50 or more should understand.
One myth is that a person has to get rid of all of their assets to receive Medicaid which will qualify them for federally available LTC benefits. In general, the rule is a person is not allowed to keep more than $2,000 in countable assets to be eligible for Medicaid. Exemptions in some states can include your home (if a spouse, minor or disabled child still lives there), assets that cannot be converted to cash, and burial plots or spaces. Also, personal property, one vehicle, and prepaid funerals generally qualify as exemptions. The Community Spouse Resource Allowance rules permit the non-applicant spouse to keep a portion of the couple’s countable assets to prevent them from becoming destitute. Before making any attempt to spend down assets to qualify for Medicaid speak to an elder law attorney as the federal five-year “lookback” rules have penalties and exceptions.
No, Medicare will not pay for long term care expenses except in the most specific and narrow of circumstances. Medicare will cover skilled in-home care from a nurse, occupational therapist, physical therapist, speech therapist or social worker for up to 21 days if ordered by a physician. In the case of a skilled nursing facility, Medicare pays for the first 20 days with no co-pays but if the stay is between 21 to 100 days, Medicare only pays a portion, and the beneficiary must pay the balance.
Another myth is that a person thinks they are too young to think about long term care insurance let alone the need to pay for it. The truth is that even under the age of 65 if the person has a chronic illness like diabetes or high blood pressure or in the event of an accident, long term in-home or residential care services may be needed. According to the US Department of Health and Human Services on average, about 8 percent of people age 40 to 50 have a disability that may require long term care services.
Relying on the hope that family will take care of a long term care need is often a myth. While many older Americans are successfully aging in place, in part due to the benefits of technology, unpaid family member caregivers and community organizations are typically not willing and available for long-term, intensive caregiving. A family discussion is needed if there is an expectation that a family member is willing and able to take on a long term caregiver role. While many family members are eager to provide oversight through the use of technology, the intensive requirements of long term care are usually more than they are willing to accept.
Most health insurance policies will not cover long term care expenses to any meaningful degree. Some plans will have minimal home care and skilled nursing benefits; however, the nature of the plan is short term and is intended to produce recovery and rehabilitation while long term care is generally custodial in nature for the safety, maintenance and well being of a person with a chronic condition. Even some long term care insurance policies will not cover all long term care expenses. There are elimination periods which function as a deductible or after a policy benefit has been exhausted. Specific coverage in long term care varies widely from policy to policy.
Finally, many aging Americans feel that their retirement savings will cover the costs of their long term care. The website A Place for Mom has a financial calculator to help individuals understand their specific needs to cover long-term care costs. Currently, the average US national median long term health care cost is about $50,000 for a home health aide which is above and beyond all other living costs. In many situations, in particular with residential care, costs can run hundreds of thousands of dollars over a few short years. Unless a person is independently wealthy, most retirement savings will be spent down very quickly.
Chances are you will need long term care during your lifetime. Being educated about what is best suited to meet your personal financial and health background needs is a significant first step. Next, understand what legal options are available to help you in the event you need significant long term care and may run out of money trying to pay for it.
We are here to help. Contact our office today and schedule an appointment to discuss how we can help you with your planning.