Retirement Planning & Long-Term Care

Long-Term CareMedical advancements are enabling Americans to live longer than ever before. Consequently, retirement plans need to reflect a longer view than they did even a decade ago. Now is the time to review and possibly revise a retirement plan to make sure it can address the rising costs of living longer.

Living longer also comes with increased risks of developing a debilitating condition, requiring some form of care or assistance. Whether it is a simple surgery, that requires short-term assistance, or something life-changing like Alzheimer’s or dementia, which needs escalating, long-term care, every adult must include considerations for these eventualities in their retirement plans.

Care varies not just in length, short or long-term, but also in who administers it, family members, volunteers, professional non-medical aids, or skilled medical staff. It is important to remember that not all care, even that provided by professional aids or skilled nursing staff, is covered by Medicare or supplemental insurance.

Long-Term Care Insurance

This is why getting long-term care (LTC) insurance may be the wisest investment healthy adults can make, if they can afford the often pricey premiums. On average, long-term care insurance policies cost about $3,000 per year. Long-term care policies cover most of the expenses that Medicare and supplemental insurance do not. They also help cover the costs of being in a personal care setting, or in some parts of the country, they may cover assisted living costs as well.  However, long-term care coverage typically does not kick in until the insured patient has been receiving qualifying care from professional skilled caregivers for at least three months.

Medicare Private Fee for Service Plans

A Medicare Private Fee-for-Service (PFFS) plan is another insurance option to consider. Such plans are purchased from private insurance companies and are used instead of traditional Medicare and Part B supplements.

Medicare Private Fee-for-Service Plans may offer more choice in care but may also cost more in out-of-pocket expenses than traditional Medicare and supplemental insurance policies. Also, they aren’t available in every state.

Traditional Medicare

Medicare is available to everyone age 65 and older, who has worked at least 10 years. However, Medicare will only cover medical care costs. Medicare does not cover care provided by non-medical staff, such as aides who assist with activities of daily living (ADLs) like dressing, eating, bathing, or using the bathroom. This can be a problem when the patient needs to be in a care facility on a short or long-term basis. When in a facility, Medicare only covers care provided by medical staff. Medicare does not cover room and board, or any of the care provided by non-medical personnel even though such care may be essential.

When to Consider Care Needs

All too often, adults don’t realize that their Medicare coverage or retirement savings won’t cover all the costs of their care needs until they find themselves needing such care. And that is, of course, the worst possible time.

The best time to think about future short and long-term care needs is while you are in good health. Now is the time to research the costs of care facilities and learn, for example, that the national average cost per day to stay in a nursing facility is just over $200. That’s about $6,000 per month. Those costs are even higher for patients who need more intense or specialized care, such as those with memory care needs.

Now is also the time to realize that Medicare will only cover up to 100 days of nursing home care. Long-term care policies offer much greater coverage but have their own sets of restrictions and limits.

Everyone, especially those who are healthy, should start thinking and planning for the days when they might not be young and healthy. Making a wise plan now to prepare for those days in the future will go a long way toward making sure the care that will someday be needed will also be covered.

Have Questions About Your Retirement Planning?

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