The Dreaded Long-Term Care Conundrum
What Would You Give Up To Pay for Long-Term Care?
Have you ever thought about what it might mean to you, financially, if you or someone you love needed to move into a long-term care facility? Believe me, it can cost you. Too many, including myself, know from experience. Once someone needs care…. it’s often too late to plan. Finding care in a hurry may put your family into a tailspin, to quickly find a facility or company that you like, which has spots available AND THEN you have to figure out how to pay for it.
A little bit of forethought and conversation can go a long way in preventing stress and chaos for your family. In this blog, I hope to give you an overview of the cost of long-term care and a brief description of some options to help cover the cost.
The most daunting thing to consider about long-term care is the cost. The average cost of a nursing facility is $6,000 a month1. With bed shortages and the mortality tables increasing the costs will only be accelerating. Without additional planning, paying for long-term care might look like this:
Of the $6,000 owed a month, part will be paid from your regular income such as $800 a month from Social Security and $400 from your pension. That covers $1,200 of the cost but that leaves $4,800 that a spouse at home will need to cover. In addition, the spouse will also need to maintain their standard of living and handle the household bills or move from the family home.
Should you find yourself in this situation, whether you are the one in care or the one at home, you will need to think about what you are willing to give up. What will you have to sell to help fund a stay in long-term care? What portion of your lifetimes hard work and savings will you use on care costs- rather than pass on to your heirs? If you find yourself in this situation give us a call, we would be happy to talk through your options. If you are able to plan ahead there are some options to help offset the cost of care.
One of the options to help offset the cost of nursing care is long-term care insurance. This is a private insurance policy separate from traditional health insurance or Medicare. It is designed to pay for care services and support in home or in a facility. It is generally an expensive policy, but offers more flexibility and options than Medicaid.
On occasion, employers may offer long-term care benefits, this offering comes with its own set of pros and cons to consider. The ideal time to begin shopping for long-term care insurance to get the best rates is between 60 and 652.
Life Insurance LTC- Rider
With the rising costs of long-term care and the high cost of long-term care insurance, the life insurance industry got involved in long-term care planning as well. Some life insurance companies now offer a rider on life insurance policies that allow you to access “living benefits”.
Living benefits are used when you are still alive but confined to long-term care. The life insurance company allows your family to access the death benefit prior to your death to draw money out tax-free to help you pay for the cost of care. While these riders have their limitations, they can be a huge help.
An additional advantage to a long-term care rider is that once you do pass the remaining balance of the death benefit will be paid out. Ultimately, this type of policy is about making sure money is available when you need it which can protect your other assets.
There are ways to use Estate Planning tools to position your assets in a way which may help pay for care costs. We review this option in our monthly meeting. For more information or to RSVP for the next session click here.
Proper Planning Pays Off
At The Resource Center, we believe in helping you make decisions and create a plan to cover the potential of long-term care. Taking the time to make a plan removes much of the burden on children or other family members. Plan early when you are still able to have conversations with your spouse and family members. Waiting to buy insurance or make plan is a bet that you will stay healthy, It’s a calculated risk some may not be willing to take.
We are more than happy to sit down and help answer questions, giving you the information you need to have a dialogue with your family. There are solutions to the long-term care conundrum and it doesn’t cost you anything to come in and chat.
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Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and The Resource Center, Inc. are not affiliated companies. Life insurance riders may be available for an additional annual premium; riders may not be available in all states. 744711-10/20