The decision to need long-term care is often fraught with emotion. Often family members have preconceived notions about the quality of care and facilities that are available.
Depending on the type of long-term care needed, it can be very expensive. This is largely because it isn’t covered by regular health insurance or Medicare.
1. Age
The best time to think about long-term care planning is when you’re healthy and able to make informed decisions. It’s also much cheaper than waiting until a medical issue arises.
Some people need long-term care because they can’t perform activities of daily living on their own, including bathing, dressing, grooming, eating, and moving around (transferring in or out of bed or a chair). Others require help because they have memory loss or other mental impairments.
Many families end up providing this type of care, and a study by the Nationwide Retirement Institute found family caregivers spend an average of 56 hours per week on caregiving tasks. To avoid placing a financial burden on your family, consider long-term care insurance, which is available to adults age 50 and over.
2. Health
Long term care planning is especially important for couples. It’s easy to assume that one spouse will take care of the other when it comes time for long term care, but it doesn’t always work that way.
Generally, people will need help with the activities of daily living, which include eating, bathing, and getting dressed. This kind of care is often expensive, and if it’s not covered by insurance, families may have to liquidate assets.
Long term care policies are available from private insurance companies, and premiums vary based on age, health, and coverage amount. Some employers offer group plans, which can make it easier to qualify for coverage. You can also purchase a policy independently or through an agent. Some states have tax incentives for buying a long-term care policy.
3. Needs
Long-term care planning helps a person focus on the needs they may face in the future and makes it easier to discuss these issues with family members. It can also help reduce the emotional and physical burden on family caregivers.
Many people consider buying a long-term care insurance (LTCI) policy to cover their care costs. Traditional policies provide comprehensive coverage for care services and may include inflation protection. However, the cost of these policies can vary widely and they often require medical underwriting.
The cost of a long-term care stay can quickly deplete retirement savings. LTCI can help reduce these costs by providing a predictable source of income. It’s generally more affordable to purchase a policy when you are younger and in good health.
4. Lifestyle
Depending on where you live, the type of care that you require and how long you need it, long term care costs can vary widely. It is important to consider these potential costs and to build a plan accordingly.
It is also important to consider the impact of your care on family members and loved ones. In many cases, caregivers have to reduce their work hours or even quit their jobs to take care of an ill relative. This can jeopardize their retirement security and cause significant stress on the entire family.
When creating your retirement plan, it is important to separate assets that you intend to use for long-term care into a distinct bucket, away from your spendable retirement assets. This will ensure that these assets are available for care if necessary and will not be used up by other expenses.
5. Financial
Depending on your situation, there are several ways to fund long-term care expenses. A financial advisor can help you examine your options and determine what method(s) may best meet your goals.
The type of care you need – whether it’s skilled nursing to recover from an illness or injury or personal care that helps you with your activities of daily living, such as bathing and dressing – will impact the amount you spend on care. It’s important to learn about your options while you’re healthy so you can decide what’s right for you.
Be aware that traditional long-term care insurance policies require a physical exam or medical records review and have age and health requirements. However, new hybrid life and annuity policies may offer an option for people with pre-existing conditions.
