Wednesday, 29 November, 2023

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Paying for Long Term Care: The 2020s Edition

Paying for Long Term Care
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How do most people plan on paying for long term care? The time might seem a long way off now, but the government figures that at least 70 percent of Americans will need long term care at some point. On the positive side, average lifespans have increased over the past few decades; however, the longer people live, the more likely that age and infirmity will make it difficult to take care of themselves, at least to some degree.

Thus, it’s important to consider paying for long term care when making retirement plans. To get started, learn more about long term care, LTC types and costs, and alternative ways to plan the possibility and the cost.

Who Needs Help Paying for Long Term Care?

According to the federal government:

  • At least 70 percent of people turning 65 today will need at least some assistance during their lifetime, though some people require this type of assistance when they’re younger.
  • Women tend to require assistance longer than men do. Women also tend to live longer than men and may provide their partners and family members will assistance when they’re able.
  • About 20 percent of the people celebrating their 65th birthday may need long term care longer than five years, though 30 percent may never require much or any assistance.
  • Some people may thrive on informal support from friends and family members; however, this care can take a toll on caregivers, and many older people hesitate to ask for help because they would rather not burden their families.

Does Medicare Pay for Long Term Care?

Lots of people assume that Medicare pays for long term care. While this public program offers some benefits, they’re limited. For instance, Medicare pays for short-term stays in long term care facilities or skilled home healthcare after a hospital stay. It doesn’t pay for assisted living because a Medicare beneficiary needs extra help with activities of daily living.

Unlike Medicaid, Medicaid will pay for long term care. However, to qualify for Medicaid, recipients need to deplete most of their assets and have very low incomes. Also, only some providers and facilities will accept Medicaid.

Long Term Care Options

Of course, everybody won’t want or require the same type and level of care. Typically, the price of care can vary considerably with the type and amount needed, though other factors also affect it.

Typical long term care options include:

  • Skilled nursing: Nursing homes offer nursing care and generally provide 24-7 monitoring. They’re generally regarded as one step below a hospital.
  • Assisted living: Assisted living facilities offer an option for people who don’t need constant medical monitoring but may need help with activities of daily living, called ADLs. These include mobility, feeding, grooming, hygiene, and toileting.
  • Independent living: Independent living homes generally look more like apartments but may provide additional services, like meals, transportation, and concierge services.
  • Home healthcare: Home healthcare companies can provide most of the services offered by a residential facility; however, the providers travel to people’s homes.
  • Adult daycare: An adult daycare offers services during the day, when other family members might be at work or attending to other obligations.

Note that the names of these facilities might define the minimum level of care to expect. However, the line between them isn’t set in stone. Very often, they provide basic services and individuals pay for more care on an as-needed basis.

For instance, many assisted living facilities have a nurse on staff to tend to minor issues, communicate with doctors, and dispense medication. Similarly, an independent living residence may offer aids to help with ADLs. Typically, home healthcare services provide flexible part-time, full-time, or as-needed care, which could include nurses, therapists, aids, and more.

How Much Does Long Term Care Cost?

Get ready to see some eye-popping numbers. US News reported that the average price for a year of care in a nursing home in the United States exceeds $100,000. Expect assisted living to cost about half that much. Home healthcare varies, depending upon need. For instance, full-time home healthcare might cost more than a nursing home, but it can offer an affordable option for people who only need help for a few days or a few hours a week.

How Do Average People Afford Long Term Care?

After finding out how much long term care costs, most people wouldn’t feel surprised to learn that unpaid caregivers provide 80 percent of care in the United States. This may work out well for relatively independent people who just need a helping hand, but many of these friends or family members devote 20 hours a week or more providing various types of assistance for their loved ones.

The government says that Medicaid pays for more long term care in the US than any other entity. Qualifying for Medicaid varies by state, but requirements usually include a very low income and little savings. Thus, many older people spend their savings on care and then turn to Medicaid after they have depleted everything.

Of course, some relatively wealthy people can budget for the care they need because of savings or income. Others may own a home that they can sell to fund their stay in a residential facility. Still others plan on paying for long term care by:

  • Purchasing long term care insurance: This type of health insurance can cover all or part of the cost of qualified long term care services.
  • Obtaining reverse mortgages: A reverse mortgage basically “buys” the home but lets the owners continue to live there. The occupants might use the income to help defray the cost of caregivers.
  • Using life insurance and annuity options: Some of these insurance products offer riders that will pay cash if the insured person needs care.

How Are You Planning on Paying for Long Term Care?

If you have an extra million dollars laying around, you might not worry about the cost of long term care that much. On the other hand, most people want to save their money or pass it on to the next generation. They would also rather not need to rely on family or deplete their savings. That explains why you should understand how long term care works, explore options, and include a long term care plan in your retirement plans.

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