lifehappens.org
If you develop a chronic illness or become disabled and can no longer care for yourself for an extended period of time, you’ll need long-term care services.
And they aren’t cheap.
The median cost for a home-health aide for an eight-hour day is more than $44,000 a year, while nursing care in a facility with a private room has a median cost of almost $84,000 a year.1 As life expectancies increase, so does the duration of long-term care needs, and the financial burden may end up falling on your loved ones after you’ve run through your own life savings.
The advent of modern medicine has given us a longer lifespan…not care-free one. The longer we’re alive, the more certain will be the need for someone to provide long term care (feed, clothe, bathe, transport, etc.).
Did you know that neither your health insurance nor Medicare would pay for extended long-term care services in the event that you needed them in the future?
Imagine the burden placed on loved ones, emotionally and physically, if they’d have to provide this care on an on-going basis. How would new bills be met?
You Basically Have 6 Options
Option 1: Pay for it yourself
If you can self-insure, either by using savings, home equity or a reverse mortgage, that may be the best way to go. You can stay at home, have interior modifications and call the shots in terms of your caretaker(s.) Talk with your advisor to make sure there’s money in place for this which won’t change your lifestyle. Note: Most advisor do not plan for LTC.
Option 2: Medicaid/ Medi-Cal
Unfortunately, Medicare does not pay for Long-Term Care. However, if your income drops below a certain level you may qualify for State insurance, which does cover LTC.
Option 3: CalPERS
The CA Public Employees Retirement System is a great deal if you’ve worked for the State! Their plans include an LTC option but you must pay a premium and sign up for it during your employment. I have several teachers I work with who are relived that this benefit is included. If you work or have worked for the State and are not sure if you have this benefit, contact your HR department before you need the care. Note: This care is also available with certain Unions.
Option 4: Life Insurance Policies
Some newer life policies may include an LTC or “Chronic illness” rider, either free or optional. Since these are considered “riders,” you cannot call it “Long-term Care” in the State of CA. However, I’ve noticed many clients aren’t sure if this is included or not. If you’re not sure, either look in your policy’s summary pages or have your policy reviewed by your agent. LTC or Chronic Illness riders can be life-savers because they allow you to advance up to 100% of your death benefit for LTC needs.
Option 5: Annuities with Guaranteed Income Riders
All annuities aren’t the same. In recent years, some allow you to add riders that not only guarantee you income for life, but will double that income if you should require LTC. Most annuities have no annual fees, so if yours does you may have access to this important rider. If not, you may be able to roll it into a new one that does. Again, if you’re not sure, review your policy or ask your agent.
Option 6: Purchase a LTC policy
Planning ahead with a long term care policy can protect you and your family from the burdens of care and paying for needed services. Funds can be adjusted to meet costs for in-home care, as well as nursing home and assisted-living facilities, providing more choices of location and quality of service.
LTC costs are the single greatest threat to your estate, and an inevitable challenge to face as you continue to age. However, the solution is fairly simple and surprisingly inexpensive if you do something about it now.
“If there’s no enemy within, the enemy outside can do you no harm.”
-African Proverb