Long Term Care Insurance
What’s it Really Like Paying for Long-Term Care
Annual cost range is $18,720 for adult day-care services to $100,375 for a private room in a nursing home!
As written by Michelle Singletary and published in the Washington Post on November 26, 2018
One of my favorite Spock quotes from the Star Trek television series is, “Live long and prosper.” Who doesn’t want a long life, right?
But what if the longevity means spending down your money for long-term care? And that’s if you’ve been prosperous and have the funds to pay a facility or home health aide to care for you.
Genworth Financial recently released its 2018 Annual Cost of Care survey and found that the annual median cost of care now ranges from $18,720 for adult day-care services to $100,375 for a private room in a nursing home.
I asked readers to share their long-term care experiences, and here’s what they had to say:
“My mother had Alzheimer’s and was in a memory unit for two years,” wrote Chris Gonzales from California. “My dad has been in assisted living for two and half years and for the last two years has needed round-the-clock care. The cost, when my mother was alive, totaled $230,000 a year. The cost to care for dad is now $170,000 a year. This is in Fort Smith, Ark. My brother and I are very lucky that our parents lived below their means, saved, and did extremely well investing their money in the market, so money has not been an issue. We are also grateful for the ladies that watch over our father and consider ourselves extremely lucky to have people we can depend on as we both live out of state.”
“I managed the care of my mother (who had Alzheimer’s disease) from 1998 through 2006,” wrote Debbie Trice of Sarasota, Fla. “Even that long ago, the cost of her care approached $100,000 annually once she had to move from an assisted-living facility to a skilled nursing facility. The actual cost of long-term care goes way beyond the monthly or daily facility charges. Personal expenses (e.g., adult diapers, toiletries, laundry, haircuts) can be significant. I saved some money by purchasing diapers from a wholesaler and toiletries from a discount store and doing mother’s laundry myself. Medications cost more for residents in long-term care, too. Some states require that all medication, including over-the-counter items like aspirin and vitamins, be specially packaged by a pharmacist in blister packs — at extra cost, of course. Staffing is a critical issue. To keep their rates competitive, many facilities limit their staffing levels to the minimum required by law. But then some patients’ needs can’t be adequately addressed. I found it necessary to hire private duty aides to supplement facility staff for a few hours each day.”
Lane Beckham of New Jersey wrote, “Four years ago my wife (then 71) suffered a fall which led to numerous complications over the next year. She has since been bedridden going from a home hospital bed to a wheelchair. She can feed herself, converse, watch television and read catalogues, but that’s about it. We’ve had a 24/7 home health care aide since April 2015 at a current cost of $215 a day or $78,475 a year. A long-term care policy kicks in $100 a day but only for 5 years of benefit days.”
“My mother died two years ago and for the last two years of her life, she had progressively worsening dementia,”
One reader wrote. “We (mainly my sister) arranged for her to be cared for at her home. The cost was running at about $85,000 a year and that was two years ago! Why? At times, she was simply too much for one person to handle, so we often needed two people to stay with her. And while we went with the better-rated agencies, we still had problems with sitters stealing, using drugs, having friends over and even taking my mother out when they needed to run errands. What a nightmare.”
David Treece, an investment adviser and financial planner based in Miami Shores, Fla., has a client with Alzheimer’s who has a Genworth long-term care insurance policy, which so far has paid out about $323,000.
“I have learned nothing will ruin a retirement plan faster than long-term care expenses,” Treece wrote. “Try having to come up with nearly a third of a million dollars like my client if you don’t have coverage. It’s just unimaginable for most people. My biggest concerns for my clients are a group I call ‘the alones.’ These are people who have no spouse, no children, no close siblings and really nobody else. They can’t even name a beneficiary let alone someone to serve as a power of attorney or health-care surrogate. This group seems to be increasing as so many people never had children, are divorced or never married, or are estranged from family. Who is even going to help them? Our society isn’t really set up for this, and I don’t see any easy solutions.”
*****
How comfortable do you feel paying for care out of pocket when your health changes?
- Have you thought that Long-Term Care insurance would not be needed?
- Do you plan on spending down to Medicaid, a welfare program and then search for a place that will accept it – and you?
If you are concerned, contact www.TheLongTermCareGuy.com at (920) 884-3030 and schedule a time to investigate with someone who understands and can help you find a way to handle this!
Who is Going to Pay for Your Funeral?
Who is Going to Pay for Your Funeral?
Asking who is going to pay for your funeral might seem like a silly question–you probably have money in savings, a vehicle, a house, even life insurance. There should be plenty of money to pay this bill, right?
The problem is, you are gone, so now who has access to your assets?
Your Power of Attorney ends at the moment of your death. How your assets will be distributed and who has authority will all be determined in the probate process in the next few months. So, who will come up with the funds now to pay for the funeral? Even life insurance does not pay out for some time once claim forms are submitted.
Just recently, I received a call from a La Crosse funeral home who wanted to know how to get in touch with the Wisconsin Funeral Trust. This is the organization that funeral directors set up to hold prepayments for funerals. The association chose to invest the funds very aggressively and now only has money to pay out 65% of what people deposited. The funeral home that called me was caring for two individuals who had passed, and the home was trying to determine how much money the trust actually has for them. They called me is because they found me in an internet search. (If you Google “funeral trust Wisconsin”, my website comes up.) They hoped I could either help them or direct them to the correct place.
This shortcoming of the state funeral trust is important to those planning ahead for their end-of-life needs. I am a long-term care planner and, as such, include protecting funds set aside for funerals as part of my work. I help people set aside funds for their funeral using a licensed trust company who specializes in just this. The company that I use for this purpose is a licensed and bonded insurance company, required by law to retain adequate funds to cover claims. There is no cost to set up such a trust and the funds deposited earn interest. These funds are available immediately at death, even before a death certificate has been produced, to pay all the bills in full.
There is another important reason to fund a funeral trust –many people need long term care in the years leading up to their death. This can cost as much as $50,000 to $90,000 per year or more. If they did not plan in advance and purchase long-term care insurance to cover these bills, they may have to apply for a welfare program called Medicaid to pay for their care. Medicaid is a payer of last resort and will only cover long-term care expenses once you have spent down everything you own (house, car, checking, savings) to under $2000. You must also cash in life insurance before Medicaid pays for long-term care. This balance is not enough to pay for a funeral.
Medicaid does allow you to set aside money for funeral expenses, but only in an irrevocable burial trust account. Setting these up for people who did not plan for long-term care expenses has become a large part of my work.
Death happens to everyone. Don’t leave the bills for this to your children. Make sure the money is there AND accessible to them when it is needed.
Long-term care happens to 70% of adults who make it to age 65. What is your plan to pay for this care when your health changes?
For answers to either of these predicaments, reach out to Romeo Raabe at www.TheLongTermCareGuy.com or call (920) 884-3030 to schedule a time to investigate solutions. There is never a cost to investigate.
Observations from a Recent Hospital Stay
Nearly every one of the CNAs at a recent hospital stay started their careers in a long-term care (LTC) facility.
Recently, I was an inpatient in a hospital after having surgery. While there, I visited with a number of nurses and CNAs (certified nursing assistants) while they were caring for me. Nearly every one of the CNAs had started their careers in a long-term care (LTC) facility. The reasons these workers moved on to a hospital setting for work is the main problem with LTC today.
Caregivers (CNAs) are in very high demand and very short supply.
LTC workers especially are underpaid and overworked. They rarely receive merit or cost of living raises. The facilities that desperately need them are having a very difficult time making ends meet. This is because Medicaid, which pays for nearly half of all LTC in the United States, pays nursing homes significantly less than the cost of care.
Nursing homes which accept Medicare for rehabilitation care (their main source of revenue) must also accept Medicaid—the welfare program which pays for care when the patient cannot afford it. Thus, the nursing home has become the main place that will accept a person if he/she cannot pay for care in an assisted living facility. Assisted living facilities cost between $4000 and $8000 a month depending on care needs. Since they do not receive Medicare for rehabilitation care, they are not required to accept Medicaid, and many do not.
Most people cannot afford the monthly charges for long without LTC insurance.
The problem is that many people do not plan for care in later life, with investments or insurance that pays for LTC. Many of the residents in LTC facilities are on Medicaid, and most of them are in nursing homes. This is because the very nice assisted living facilities are rapidly deciding not to accept Medicaid because of its inadequate reimbursement for care.
Back to the CNAs I met in the hospital. While there is a desperate need for caregivers, those caregivers need a living wage, and many long-term care facilities are unable to provide that. So, they migrate to the hospitals who can pay them and provide benefits.
If you want to have good long- term care, in a place that appeals to you when your health changes, you need to have a plan to pay for that care or the odds may be good that a nursing home may be your only choice. Years ago, I purchased LTC insurance that will pay for the care I need, in a setting I will be happy in when that time comes. Will you?
For more information, browse all of our resources at www.TheLongTermCareGuy.com.
Beware insurance agents offering new “can’t lose” long term care insurance
Insurance companies are wooing insurance agents with something they are already familiar with – life insurance – with what looks like a neat extra benefit: it will also pay for long term care (LTC). It’s a two for one deal–it pays for LTC, and if that is not needed, your heirs get the life insurance payout. It sounds too good to be true, and it is.
There are several problems with these policies, but first let’s address the “two for one” concept. Back in the 1960s, there was a German-made vehicle called the Aquacar. It was a cute convertible that would go 50 MPH on land…but then you could drive it down the boat launch, into the water, and engage the propellers to go 4 MPH in water!
It was expensive, costing the same as new Pontiac convertible that would go 100 MPH, while pulling a boat with an outboard motor that could go 50 MPH in water. Each of these vehicles would do what it was designed for well and better than the Aquacar. But the “combo” sounded cool and every red blooded male wanted one.
How does that compare to these new life/LTC insurance policies? Here’s how: first, these new policies leave out a critical component needed for LTC—that is, 5% compound inflation on the LTC benefit that may not be needed until 20 or 30 years from now. The costs of LTC have been doubling every 15 years, meaning they will quadruple in 30 years. Eighteen years ago, a nursing home cost $4500 a month; now a nursing home costs over $10,000 a month. With full employment and a shortage of workers, cost will increase even faster in the future.
If your insurance benefit does not keep up with costs, you may need to spend-down your nest egg to cover the shortfall until you reach impoverishment. Then you might have to apply for a welfare program called Medicaid, and then find that you have limited choices for where and how you are cared for. With Medicaid there will be nothing left for heirs either. What good is such insurance? It’s a product that tries to do two things and doesn’t do at least one of them very well. Dedicated long term care policies can include inflation provisions, and I won’t sell one without that feature.
Another problem is that these combo products often require you to make one lump sum payment to the insurance company to initiate the coverage. When a claim for LTC is needed, your dollars will be used up first before getting into the insurance company’s benefit. Then, when your dollars are used and you tap into the policy benefits, the life insurance payout on your death may be reduced to nothing—depending on how much of that benefit you need to use. A dedicated life insurance policy does not loose value based on your need for long term care.
I have looked at many of these policies and found them not only lacking, but very expensive compared to traditional LTC insurance. Often that single premium that is needed to buy the two-for policy, if left in a CD or other interest earning account, could fund traditional LTC insurance premiums without ever using a penny of the principal. You keep your money and let the interest pay for LTC insurance – you get both rather than one or the other.
If you are concerned about how you will be able to pay for care when your health changes, seek out a professional with years of experience in the financing of LTC. With proper guidance you may find you need less of it than you might imagine. When the most appropriate products are offered, clients find such insurance affordable and feel secure they will be able to cover care costs without impoverishing themselves.
For more information, visit www.TheLongTermCareGuy.com and consider discussing this with an expert.
Long-Term Care: Tips for Planning and Paying
Long-Term Care: Tips for Planning and Paying
Photo Credit: Pexels.com
It’s not a pleasant scenario: your health has deteriorated to the point where your spouse can no longer take care of you on their own, and you need to consider long-term care. Or you had a fall that broke your hip, and surgery is out of the question. Or your memory is failing. Our bodies don’t heal as quickly as we age. Our very cellular structure is altered, and we cannot function as independently as we would like. And for some of us, long-term care is the only option. When that happens, we need to make some tough choices.
The good news is that the days of nursing home care being our only option are long gone. There are so many different aspects of long-term care: community-based services, assisted-living facilities, at-home care, skilled nursing, and many others. You now have many more choices when it comes to meeting long-term care needs, especially when it comes to planning for them and paying for them.
Tips for Planning and Paying for Long-Term Care:
Planning – Anticipating the Need
There are two things to consider when planning for long-term care needs: you and your spouse’s current health and any financial instruments that can help cover your long-term care costs. According to pharmacist Madeline R. Vann writing for EverydayHealth.com, there are 15 common health concerns for senior citizens, ranging from arthritis and diabetes to cancer, falls, and osteoporosis. If you currently suffer from any one of those, you might eventually consider long-term care as your condition progresses. Even if you’re currently in great health, all it takes is one fall or the sudden onset of one of those medical conditions for you to need long-term care. Once you determine that you might need it, you should consider long-term care insurance, which is a policy that will provide benefits when you need them. In addition, you should also know the value of your home in case you need to sell it to pay for the care.
Paying – Funding the Need
The fact is that long-term care is expensive. According to Genworth.com, the median monthly cost of a semi-private room in a nursing home is $7,148 per month, while the monthly median cost of a home health aide is $4,099. When you need cash to cover long-term care expenses, consider a reverse mortgage, a type of loan where your home’s equity is paid out to you monthly, and the whole loan is repaid after you die or move out of the property. There are pros and cons to reverse mortgages, however. The upsides include that you can receive a lump sum that can be used for any of your expenses and you don’t need outstanding credit to qualify for one. However, the downside is that there might be high upfront costs and interest rates, and it might place a burden on your heirs if you leave the property to them in your will and it still has the reverse mortgage attached. So, think carefully about whether or not to proceed.
Another way to consider paying for long-term care is cashing out your life insurance policy. If it is a whole-life policy, you can surrender it for its cash value, or you can get a life settlement, which is the sale of a policy to an investor. Both options allow you to free up funds for living expenses.
When you plan carefully for any long-term care needs, you can keep the costs manageable while you focus on ensuring that you or your loved one gets needed care. It’s also good to know that you have options when it comes to paying for it when the need arises.
Do You Want to Receive Home Care, but can’t afford it?
You’ve heard home care is too expensive. There are ways even if you do not have the money!
As you age, and fear that the time may come when you need help with day to day activities such as getting up, dressed, and preparing breakfast, do you worry how you might pay for such care?
You’ve heard it is expensive. You cannot afford this care or are not healthy enough to purchase Long-Term Care insurance. Perhaps you tried to purchase insurance but were turned down.
There are ways to get home care that your planner or insurance agent simply are not aware of, even if you do not have the money to pay for such care.
First, let’s look at what happens to most people. They need care and look into moving to an assisted living facility. Without the ability to pay for the rest of your life, many will say no and direct you to the dreaded nursing home who has to take you on the government welfare program called Medicaid. Assisted living does not have to accept this as they lose money on its meager reimbursement.
It seems like your only choices is to move into the nursing home, and sell your house and car and spend down all your money to less than $2000, and cash in your life insurance to qualify for Medicaid. Bummer!
Instead of selling your house and finding that only a nursing home will accept you on Medicaid, why not use your house to keep you at home?
If the choice is to sell your house and end up broke, then why not consider a reverse mortgage on the house to get the money to pay for home care and stay home?
You can spend the money from the reverse mortgage until it is gone and then move into the nursing home, or you can make the proceeds of that reverse mortgage last for your entire life. That’s right, for as long as you live, even though you cannot qualify to purchase Long-Term Care insurance. I do this regularly for people who investigate better ways to deal with Long-Term Care. I am TheLongTermCreGuy.com
Browse www.TheLongTermCareGuy.com for a wealth of information on LTCi and Call (920) 884-3030 to talk to Romeo and investigate what options might be available for you. The discussion costs you nothing. Bring your children or trusted advisor and see if you can age in place in your own home instead of going broke and ending up in a nursing home.
I Need Advice and Resources
I am a long term care planner, and I do a lot of work giving free advice on what will happen and how to best prepare for it, even if the need happened yesterday.
A family member or loved one needs long term care and needs advice. Where do I go to find this? What will this cost? We don’t have enough money to pay for this kind of care, what can we do?
Babies do not come with instruction manuals and neither does long term care. Just like most everyone else you wade in without a road map to negotiate a system you know little about.
TheLongTermCareGuy.com is kind of like AAA, I have maps and tour guides. I know resources who can help you choose the right facility for your loved one and I can provide information on qualifying for Medicaid without inadvertently incurring any penalties.
Would you like to protect some assets for family? Yes, this can happen. Remember that Medicaid will only pay once completely impoverished which includes cashing in life insurance that will pay out more than $1500 (which won’t get you down below the frost line in Wisconsin). However, parts of that policy can be saved versus just cashed in and lost.
I am a long term care planner, and I do a lot of my work in simply advising on what will happen and how to best prepare for it, even if the need happened yesterday. There is no cost for this, but I may offer information on long term care insurance to the family members who would like to be sure they have access and choices for their care.
Call me at (920) 884-3030 and we can investigate solutions or simply give some advice. No need to start this trip without a map.
There is also a wealth of information on our blog at www.TheLongTermCareGuy.com
Two Million Dollars in 30 years for $3500 per year
In 30 years, when todays 55 year olds are 85, three years in a nursing home will be a million dollars. Which account will you write the first check from?
If you could start a plan that gives you 2 million dollars for you and 2 million dollars for your spouse’s Long Term Care that costs $3500/year, would you be interested?
Fifteen years ago a nursing home was $4500/month. Today it is $10,000 a month. In 30 years, when todays 55 year olds are 85, three years in a nursing home will be a million dollars. Which account will you write the first check from?
You wouldn’t be without car or homeowners insurance. Long Term Care is far more expensive than most car accidents or homeowners claims, even if a tornado took the roof off.
How do people deal with this? Currently, most people do not plan, end up broke very quickly, and apply for the welfare program called Medicaid. Unfortunately, if you are on Medicaid the chances are good nobody but a nursing home will accept you.
The nice assisted living facilities that look like nice hotels lose money on the Medicaid reimbursements and often say no at the door if you cannot pay your own way. Thus the nursing home is a bit like debtors prison, it’s where you go if broke.
Do you want to leave something behind for family?
Do you want choices for your care?
Do you pride yourself in being able to pay your bills?
Unless you are very rich, you will not be happy when the time comes when you need help getting dressed and preparing breakfast, without insurance that pays for care in your home or assisted living facilities. LTC insurance pays for the care you want to keep you out of a nursing home.
No matter what your financial situation, I can help you with advice that will cost you nothing. I’ll even pour the coffee. But if you want to prepare for the day when you need help, and do not want to go broke and search for a care provider, then you need to investigate LTC insurance.
Call TheLongTermCareGuy.com at (920) 884-3030 and let’s schedule a chat.
Been Turned Down for LTC Insurance?
I can help you with LTC Insurance!
Have you been turned down for LTC insurance? Would you like to get some if you could?
Give TheLongTermCareGuy.com a call at (920) 884-3030 and let’s get you a policy. I have two companies you can only buy from once you are already in a LTC facility. That’s right, already in care. Two different companies.
I have a home care policy you may be able to get if you have been turned down for Parkinson’s, oxygen use, diabetes, stroke, etc. IF you are able to currently function on your own without any help from another person for at least 30 days, you can have coverage. It’s not even terribly expensive, but it’s only for care in your own home. It will pay a neighbor or a home care agency.
If none of these work for you, or you have very little money left, I can help you protect some of it for family. If you are down to your last $10,000 to your name, would you like to leave that to family or children? I can make that happen.
I am a LTC planner. I don’t just sell LTC insurance (although I have better options than most and way better advice on how much or how little to get), I help most anyone in dealing with LTC.
If Medicaid will be your only answer let me walk you through what you should and shouldn’t do to get the best result. If you simply have questions, I’m here for you. Chances are I may even offer a bit of helpful advice.
There is no cost to visit, that is how word spreads. A third of my work is actually volunteer work helping and advising people who do not know where to get the answers they need. I’m nearly 69, it’s part of my volunteer work that I will continue until I cannot.
So, if you have problems or questions, call TheLongTermCareGuy.com at (920) 884-3030 and let’s talk or meet. I’m here to help.
Debtors Prison: A throwback to generations ago
Wouldn’t you rather have the money to choose where you will live?
Debtors prison (long ago) was where you might end up until you could pay your bills or get someone to pay them for you. How does this relate to Long Term Care?
Long term care is very expensive, and most Americans have not prepared for it. When an assisted living facility costs $4000/month for hands on care or $8000/month for dementia care, most people go broke and turn to Medicaid.
Medicaid often pays less than the cost to care for you so many assisted living type facilities may decline to take you in if you cannot show an ability to pay for two years with money or LTC insurance.
Nursing homes are different. Much of their work is in short term rehab after a hospital stay which Medicare pays for. This they can make money on to offset what they lose on their residents living there on Medicaid.
Assisted living does not get such Medicare payments. Either you be able to pay for the care you need or go elsewhere. To keep their doors open they cannot lose money on every resident. If the nursing home accepts Medicare, then they must also accept Medicaid.
Thus, if you have lots of money, or insurance for LTC, you can go where you want. If you do not have money or LTC insurance, you might need to settle for a nursing home that may be your only choice due to finances. Now do you see the correlation to debtor’s prison?
Wouldn’t you rather have the money to choose where you will live? If you don’t have the money, investigate LTC insurance – while still healthy enough to get it. It’s just like car insurance, you have to have it before you suddenly need it.
Call TheLongTermCareGuy.com at 884-3030 and schedule a time to investigate.