Don’t overlook this essential part of retirement planning.
– By George T. Leamon, CLTC – Lutgert Insurance –
There are four types of People in this world. Those who have been caregivers. Those who are caregivers. Those who will need a caregiver. Those who will be a caregiver. – Roslyn Carter
Most retirement planning is about means, not ends. It’s about making sure you have as many options as possible, not telling you how to spend your money. This month, however, I want to suggest that you set aside a significant amount of your monthly budget for a purchase that is often considered somewhat controversial: long-term care insurance.
Long-term care includes medical and nursing services beyond your typical visits to the doctor, treatment for illnesses and short hospital stays. It’s the kind of ongoing help you need when you can’t handle activities of daily living, such as bathing, eating, or dressing. It can take place in your home, assisted living facilities (residences with services that monitor your health and provide your meals), or nursing homes.
The case for insuring yourself and your family against the costs of long-term care is straightforward and essentially statistical. First, however healthy and hearty you may be today, you might need help tomorrow. Americans age 65 and over have a 40 percent chance of entering a nursing home at some point during their lives, according to the Department of Health and Human Services. Meanwhile, today 55 percent of Americans age 85 and over are impaired seriously enough to require long-term care, according to America’s Health Insurance Plans, a trade group. Many of these seniors will get help at home, but a good portion of them will have to move into a facility.
Second, this kind of care is extremely expensive and getting more so every year. The annual cost of private nursing-home rooms averages a whopping $79,700 in 2009, up 7.3 percent since 2004, according to the Met Life Mature Market Insurance. The average cost of 12 months in an assisted-living facility was $46,800 in 2009 up 17 percent since 2006-and that doesn’t include extra charges that some impose for dementia care.
Third, for most Americans, long-term care isn’t covered by other types of insurance. Don’t be confused by the fact that Medicare pays for “skilled nursing care.” This refers to short-term help you may require to get over an injury or acute illness. If you break your leg, for instance, Medicare will cover the cost of “medically necessary” care, like physical therapy, for 20 days. (It will then cover part of your costs for another 80 days, after that you’re on your own.) But, if you are chronically sick or permanently incapacitated, Medicare will NOT help. Neither will Medigap or Medicare Advantage policies.
The question people ask most often is “What is MY risk?”
It’s a valid question, but the fact is your real risk of needing long-term care at some point in your life is either going to be 0% or 100%.Either you will need long-term care or you won’t. Averages merely show how many people out of every 100 have a need. Nice information to know, but no prediction of your individual real risk and need. Everyone is at risk.
Once you understand that a risk exists, your two big decisions are: 1) how do you handle the risk….and 2) if long-term care insurance is an option, how much protection is appropriate. The more protection you want, the more coverage costs. IMPORTANT NOTE: An experienced long-term care insurance professional can help you take advantage of discounts and show you ways to maximize your coverage even when budgets are limited.
Since no one can predict your true risk, the best we can do is provide information on what happens when someone with long-term care insurance has a claim.
George Leamon, Life and Long Term Care Specialist with Lutgert Insurance, has been in Naples for over 35 years helping seniors with their Life Insurance. Long-Term Care, Annuities and the rapidly changing Medicare arena. When was the last time you had your insurance reviewed?