If you’re planning for retirement, you probably know that long-term care is a very real possibility. The U.S. Department of Health and Human Services estimates that retirees have a 70 percent chance of needing long-term care.1
But how much will your long-term care cost? There are a few factors that impact the cost of care. One is the type of care you need. You may simply need help with basic chores and errands. Or you may need more intensive support with things like bathing and mobility.
The duration of care is also important. Obviously, the longer you need care, the more it will cost. However, that can be difficult to predict. Some people need care only for the final months of their life. Others suffer from long-term disorders such as Alzheimer’s and need care for years.
While you can’t accurately predict your future care needs, you can develop an estimate based on current costs and projections. You can then use that information to develop a funding strategy. The information and guidance below will help you estimate your potential needs. Discuss your options with a financial professional to develop a strategy that’s right for you.
Type of Care
Long-term care is a broad term that applies to a wide range of services. Not all types of long-term care are the same. The type you need has an impact on the cost. Medicare may cover some services but not others, and some services cost more than others.
Fortunately, you can use current pricing data to develop an estimate. Genworth’s annual study of national long-term care prices found that the average room in an assisted living facility cost $4,000 per month in 2018. A full-time home health aide averaged $4,195 per month. A private room in a nursing home cost more than $8,000 per month on average.2
Keep in mind that most of this care isn’t covered by Medicare. A stay in a nursing facility may be covered if it’s related to specific treatment and a recent hospitalization. Also, starting in 2019, some Medicare Advantage policies will cover in-home custodial care. However, Medicare usually only partially covers these costs.
Medicaid will also cover care in a skilled nursing facility. To qualify for Medicaid, however, you must have little income and few assets. While the eligibility rules vary by state, in general, seniors have to spend down their own assets to qualify for benefits.
Duration of Care
Clearly, you can’t predict how long you will need long-term care because you can’t predict your level of need. However, current projections can help you develop an estimate. The U.S. Department of Health and Human Services has estimated that the average woman will need care for 3.7 years, while the average man will need it for 2.2 years. Of today’s 65-year-olds, 20 percent will need care for more than five years.1
It’s easy to see how long-term care costs can be substantial. Long-term care insurance can help you manage the risk. You pay premiums to an insurer today, and then the insurer pays for some or all of your long-term care costs in the future, depending on the specifics of your policy. Many insurance policies cover care provided either in the home or in a facility.
Ready to discuss your long-term care strategy? Let’s talk about it. Contact us today at M&P Personal Financial Planning. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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