You’re diligently saving money for retirement, so you’ll be able to live comfortably as you age. But if you’re not accounting for long-term care costs, you could be in for an unpleasant surprise. Many adults don’t realize that long-term care isn’t covered by most health insurance, and as a result, fail to plan for this important expense.
Seventy percent of people 65 and older will require long-term care, according to Forbes. For some, that takes the form of part-time, in-home help to assist with the tasks of daily living. For others, it’s a permanent residence in a nursing home or other residential care facility.
Either way, care doesn’t come cheaply: The median cost of a private room in a nursing home is approaching $100,000 per year, while 44 hours per week of home health care is nearly $50,000 annually.
To assess whether you’ll need long-term care, take a look at your current health and lifestyle. Are you physically fit with a good diet, no unhealthy vices, and no chronic health issues? If you’re healthy now, have a safe living environment, and don’t have a family history of disabling illness, your long-term care needs may be minimal. But if you’re already facing challenges in daily life, you’re likely to need assistance as you grow older.
Understand that not all health problems can be anticipated. As the rates of cancer and cognitive decline continue to rise, more people will require long-term care in old age. Ultimately, it’s best to plan with the mindset that you will need long-term care. If you anticipate needing long-term care, your best bet is to tour various Omaha facilities and communities now to get a close-up view of costs, types of care provided, proximity to medical facilities, and to confirm amenities. Zipping this up now will make the transition easier if and when the time comes.
Medicare covers many health care needs for the 65+ community, but it generally doesn’t pay for long-term care. While Medicare may cover a short-term stay in a skilled nursing facility, it doesn’t cover long-term stays or caregiving provided in your own home.
Many seniors close the gap between Medicare coverage and long-term care needs with long-term care insurance. This insurance covers a variety of levels of care, including skilled nursing, rehabilitation, and personal care services. Long-term care insurance is a good choice for seniors who don’t have the assets to cover healthcare needs out of pocket. Even if you have substantial assets, long-term care insurance can reduce the amount you spend.
While long-term care insurance premiums can be costly, aging adults save by purchasing a policy before the age of 65. If you wait until you’re older to purchase coverage, you not only face higher premiums, you also run the risk of being denied coverage entirely. Unlike health insurance, long-term care insurance providers can deny coverage to applicants with pre-existing health conditions.
If you’re still working, start setting aside extra funds to cover long-term care needs. You can do this by contributing extra to your IRA or 401(k). If you have a high-deductible health plan (HDHP), you can contribute to a health savings account (HSA) and withdraw funds to pay long-term care insurance premiums.
If you’re approaching retirement or already retired and don’t have the money to pay for your long-term care needs, you still have options. Applying for a reverse mortgage and selling a life insurance policy are two ways older adults can free up a large chunk of funds to pay for care. If you have limited income and assets, you may qualify for Medicaid. Unlike Medicare, Medicaid may pay for long-term care in an institution or in your home. However, a senior’s care needs must be assessed and deemed eligible before Medicaid will approve coverage for long-term care services.
Seniors who need long-term care for several years could be facing costs of $1 million or more. Planning for that expense makes the difference between a comfortable retirement and financial strain in your old age. If you’re not already saving for your long-term care needs, now is the time to start.
The author of this article is Hazel. She is a breast cancer survivor. She challenges herself to live life to the fullest and inspire others to do so as well.