Long-Term Care: What Seniors Need to Know to Plan Accordingly
When you hear the word “long-term care,” do you know what it is referring to? According to the U.S. Department of Health and Human Services, long-term care refers to services provided to meet your daily needs, and “[m]ost long-term care is not medical care, but rather assistance with the basic personal tasks of everyday life, sometimes called Activities of Daily Living (ADLs).” If you aren’t sure if you’ll need long-term care, consider that studies show that 69 percent of people ages 65 and up will need long-term care at some point in their life. Knowing this, how can you plan ahead and afford the costs?
Assess Your Need
There are many different types of long-term care, including around-the-clock care, intermittent care, and custodial care such as home health care if you don’t need 24-hour care. It’s hard to pinpoint whether you will need long-term care, and if so, what kind or how much. One thing is certain: it comes at a price, and this can quickly add up to a hefty bill. Take a moment to assess your current situation to determine the likelihood of needing care. Life expectancy is increasing, and the older you are, the more likely you are to need some form of assistance due to declining health, mobility, or independence. Speaking of health, what does your health history look like? Are there any hereditary diseases that could impact you in the future? Are you making positive lifestyle choices to improve and maintain your health such as diet and exercise?
Make a Plan
Whether you are working toward retirement or are already enjoying that sweet freedom, it’s never too early to create a plan for long-term care and start saving now. Consider increasing the amount you are contributing each paycheck to your retirement account, or set aside a certain amount each month that can go into your own long-term care account. If you have a high-deductible health plan, see if there is an option for a health savings account (HSA) to set aside funds to be used for healthcare needs down the road. Take a look at your current insurance policy too, and ask if there is a long-term care option. If not, it’s worth it to shop around for long-term care insurance (LTCI).
How to Pay
One of the most common ways to pay for long-term care is through long-term care insurance (LTCI), as most people can’t afford care out-of-pocket and Medicare won’t foot the entire bill either. Meet with a financial planner to determine what LTCI plan meets your needs, and shop around to find the policy you’re comfortable with. Before you sign on the dotted line, go over the policy line by line and read all of the fine print. Ask how many years of care will be covered and what capacities must be lost for the insurance plan to kick in. Make sure you will be able to pay the monthly premiums, because if you stop payments, you not only lose all the money you paid in, but you are also no longer covered.
Try a Combo
Rather than a full-blown LTCI plan, it is possible for you to combine it with a regular life insurance policy, which, according to Kiplinger, “allows for an acceleration of the death benefit to help cover the costs associated with qualifying long-term care expenses.” Should you use these funds, it will be deducted from the amount your beneficiaries receive when you pass away. Should you not have to use it, the tax-free death benefit can be passed on to your beneficiaries. Furthermore, if you decide you don’t want or need it, you can turn in the policy for its cash value. For more information on the LTCI life insurance policy, as well as other ways to fund long-term coverage, check out this article from Investment News.
Long-term care might not be something you want to think about, but it is important to make plans now for care later. Assess the probability that you will need care and put together a plan to address your future needs. Most importantly, look into payment and savings options so that you are ready for whatever your golden years throw your way.
June is the co-creator of Rise Up for Caregivers, which offers support for family members and friends who have taken on the responsibility of caring for their loved ones. She is author of the upcoming book, The Complete Guide to Caregiving: A Daily Companion for New Senior Caregivers.