Long-term care costs are daunting.
No one likes medical bills.
Even with a job and steady income, they are intimidating.
As you age, your need for health care services will likely increase.
That is a cold, hard fact.
According to a recent MarketWatch article titled “This is how much long-term care could cost you, and don’t expect Medicare to help,” most people over age 65 will eventually need assistance with activities of daily living.
Most men will require these services for about 2.2 years.
Most women will need them for an average of 3.7 years.
How much can these services cost?
The media yearly cost of a private room in a nursing home is more than $100,000.
About one third of seniors will spend some time in one of these facilities.
About 40 percent of seniors will utilize at-home care.
The median yearly cost of a home health aide is more than $50,000.
About 15 percent of those over age 65 will incur long-term care costs exceeding $250,000.
How does one pay such a bill?
Medicare will be of no help.
Private health insurance also does not typically cover custodial care.
Some may be able to take advantage of free care from family members, but those who are single or have been widowed may find this impossible.
How can you prepare for such costly care?
Long-term care insurance.
Long-term care insurance will help you pay for part of your long-term care costs for a defined time period.
Do not wait too long to apply.
Premiums will rise with age.
The average yearly premium for a couple who are both age 55 averages $3,050 in 2019.
If you are healthy, this is a wise option.
If you have chronic conditions, you may be ineligible and should explore other options.
Hybrid long-term care insurance.
Some life insurance policies or annuities can carry long-term care benefits with them.
Any long-term care benefits remaining unused when you die will pass to your heirs as life insurance death benefit proceeds.
You may be able to have a lifetime payment option, but most are paid in five to 10 year installments.
If you move into a nursing home and will not return to your house, you could sell your home to fund your care.
If you have a spouse, a reverse mortgage could be a good idea.
Reverse mortgages allow you to get a loan on your home equity while still living in the house.
When does the loan come due?
You will be required to pay in full when you move, sell the home, or die.
Saving early and often can help with long-term care costs.
If you have successful investments, the income can be used to make payments.
If none of these options is possible, you may need to spend down to be eligible for Medicaid.
Medicaid has specific guidelines so it would be wise to work with an experienced elder law attorney.
Long-term care is costly, but early and careful preparation can weaken the bite.
Reference: MarketWatch (July 19, 2019) “This is how much long-term care could cost you, and don’t expect Medicare to help”