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Planning for the Cost of Life Care

Are you prepared to cover the cost of elder care for yourself or your loved one? As the costs of medical care and other related expenses continue to rise, this is an important conversation to have — inside of your own family, and with your financial advisor.

What can you expect to pay? According to Genworth, the median cost of in-home care is $54,912 per year. If you have to go to a nursing home, the cost of a private room is $105,852 per year. And unfortunately, only about one-third of seniors have enough money set aside to cover these expenses.

If you’re feeling unprepared, here are some tips for how you can plan to cover the costs of senior care.

What Are Your Needs, Preferences, and Resources?

The first place to start is by determining what type of needs or accommodations would be best for your situation. Not everyone will require 24-hour, round-the-clock assistance right away. Many aging adults live an active life where they can do a lot for themselves (even if some tasks may take a bit longer). The transition to crisis care or extended care can happen gradually over time, or it can come as a result of a health event.

Brad Duling, a senior financial advisor at SYM Financial, suggests that you explore all of your options, starting exactly where you are right now and looking out into the future.

Do you want to stay in your home?
Do you have adult children or other relatives nearby who can help if needed?
Would you prefer to move to a condo or an assisted living facility, where you can be in a community of people who are similar to you in age?

It can be helpful (both mentally and physically) for seniors to remain as independent as possible and go about their daily routines for as long as they can. And even if you do eventually require some at-home care or a move to an assisted living facility, these options can be far less expensive than a long-term nursing home.

In-Home Care

If staying in your home is your preference, then you have several options for getting the personalized assistance you’ll require. Skilled care professionals can help with medical issues such as administering medications, checking vitals, and maintaining any necessary equipment. These individuals will have specialized training or licensing to ensure they’re qualified to perform these critical tasks.

There are also custodial care workers who can help with non-medical needs. These might be hygiene-related tasks such as bathing, grooming, and using the bathroom. They could also include helping out with routine chores such as cooking, cleaning, and even providing transportation.

If hiring a caregiver is too expensive, you could also consider reaching out to a volunteer group. Organizations like Senior Corps and Meals on Wheels provide free assistance to thousands of seniors in need.

Long-Term Care

While many retirees would prefer to stay in their homes for as long as possible, the reality is that medical complications and physical limitations can eventually make this too challenging. According to PBS, 70 percent of Americans older than age 65 will need some form of long-term care.

One option is to go into a private care facility where you’ll pay for expenses out of pocket. Although this is typically the most expensive option, you still have choice around which facility you choose. “You don’t have to go to the most elite facilities that cost $150,000 or $180,000 per year to get quality care. There may be reasonable, high-quality alternatives that cost much less,” shared Brad Duling.

If you plan to rely on an insurance or assistance program, it is important to understand each type of program and its benefits. There is a lot of confusion about what different programs will pay for, and it is heartbreaking to discover that an expense you thought was covered will have to be paid out of pocket.

For example, Medicare doesn’t cover the cost of long-term nursing home care. At best, it will only provide for up to 100 days of rehabilitation following an accident or medical emergency.
Another example: Medicaid will cover the expense of a nursing home for a qualifying senior. However, in order to qualify, you have to meet strict financial eligibility requirements, such as exhausting all of your assets (except your home).

According to Duling, “It’s very difficult to qualify for Medicaid. If you have a significant amount of assets, you’d have to consider an alternative type of strategy, such as transferring them into an irrevocable trust so that you won’t have access to them.” These irrevocable Medicaid trusts would then have to meet a five-year look-back period before you’d be considered eligible. In other words, if you have assets beyond your own home, this strategy requires careful and early planning.

Assistance for Veterans

If you’re a veteran, then there may be some additional resources available to you beyond Medicare and Medicaid. According to VeteranAid.org, the Aid and Attendance pension can provide up to:

  • $1,881 per month to a veteran
  • $1,209 per month to a surviving spouse
  • $2,230 per month to a couple

These benefits can be used for a wide variety of expenses, such as in-home care, assisted living communities, and private-pay nursing homes.

Consider Long-Term Care Insurance

One more tool that may be helpful to consider is getting long-term care insurance. These are policies that will help cover the cost of care if you develop a long-term disability or a chronic medical condition, such as Parkinson’s or Alzheimer’s disease. Long-term care insurance isn’t right for everyone. However, for the right family, it can be a lifeline. Modern policies offer a lot of flexibility and riders that can allow you to customize the policy for your needs (such as covering two spouses in turn).

There is a common misconception out there that long-term care insurance is too expensive. At SYM Financial, we often encourage our clients to get a quote before dismissing the possibility. A healthy 55-year-old man can expect to pay roughly around $1,700 per year for stand-alone long-term care insurance. If you have life insurance, you may want to check if long-term care can be added as a rider. Be sure to compare the costs of both options; sometimes, it may be cheaper to go with a stand-alone policy.

In addition to checking the costs, be sure you also read the fine print on what will be covered. Most policies define their payment commitment in terms of an amount covered per day and the number of days covered.

Finally, look at the big picture. Given your age today, your personal and family health history, and your preferences, how much would you pay in premiums from today until you are 85? Would it be better to self-insure by placing the “premium” amount into an investment account, or would you benefit from having an actual policy? Nobody has a crystal ball, and it is impossible to predict what will happen as you get older. However, running a few what-if scenarios and talking through the options is a good choice for everyone.

If you are unsure about the best way to provide for your cost of medical and personal care as you get older, reach out to our team at SYM Financial. We can guide you through your options, help you understand the programs available to you, and provide you with the information you need to plan.

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