Planning Around Long-Term Care Insurance
When planning for your retirement, considering long-term care insurance is something that is worthy of your time and attention. The best approach to long-term care insurance is an early start. It is best to think about your long-term care now, while you are young, rather than waiting to explore your options during a time of need. You may never need this insurance, but an unexpected illness, accident, or injury could change things quickly. The LA Times notes that most Americans assume Medicare will cover any of these costs, but the reality is far different.
Medicare does not cover long-term custodial care of any kind. Planning for this possibility gives you time to figure out costs and available services, and make the decisions now while you are able to do so of your own accord.
Thinking of Your House
Where do you envision living during your retirement? While most Americans undoubtedly wish to stay in their own home, it is important to think about whether your place of residence will support your needs as you age, and what to do if you can no longer fully care for yourself. If you want to stay in your home, consider these questions first:
• What is the condition of your home?
• Can it be modified to accommodate wheelchairs or other medical devices/equipment?
• How age friendly is your community? Is public transportation sufficient? What about meal delivery?
• Are long-term care services available in your area?
• What are the tax and legal ramifications of your decisions?
If you are not confident that staying in your own home is the best for you, proceed with caution when considering housing complexes with services for retirees. Some of the factors to consider include:
• Is there public housing for low-to-moderate income individuals and those with disabilities requiring assistance with services from the staff?
• Do you need an assisted living community? An assisted living community has housing and assistance with personal care and meals, but does not necessarily contribute for medical care.
• Have you considered continuing care communities, which offer a variety of options? The possibilities include or combine independent living and assisted living which could be the right fit.
Legal Decisions to Keep in Mind
As you discover your long-term care insurance options, be aware of official documents known as advanced directives that state your wishes for medical care in an emergency, as well as end-of-life directions that make it easy and clear for your loved ones to make the decisions you cannot. Discuss these options with your family members, lawyer, tax advisor, and any other loved ones you may put in a position of authority with these directives.
You will likely want to create a health care power of attorney, living will, and do-not-resuscitate order so that your final wishes are accurately and respectfully followed.
Financial Decisions
When deciding which long-term care insurance plan is best for you, be wary of plans that sound too good to be true; they most likely are. Due to low interest rates and the new wage standard for working overtime, the cost of long-term care insurance has gone up. Additionally, the costs of any health care (whether it’s home health care or assisted living expenses) have dramatically increased. If your insurance plan covers a defined amount of coverage, and the health expenses have exceeded that, you may no longer be covered for the large increase in costs.
One glaring difference between quality insurance plans and basic coverage is the Cost of Living feature (COL). COL options will help mitigate the health care cost increases. COL options is something that may not be currently covered in your plan. If unforeseen health issues transpire, it will be too late to add this feature in.
Consider the resources you have available to you and how you feel about using them to pay for long-term care insurance. Social Security, pension/retirement funds, personal savings, and any investment income should be taken into consideration when comparing long-term care insurance. For couples, it is wise to buy coverage with your spouse for discounts - married couples can save up to 30% by applying together.
It is not necessarily the health care provider’s decision to increase these expenses. They have been enduring low Treasury securities rates of 1-2%. Since this is what they have primarily invested in their General Accounts, their long term profitability estimations may fail. Eventually the result is their having to also raise premiums for the existing care features of their contracts.
Before you make any final decisions, meet with your financial advisor to create a comprehensive plan and review your available funds to ensure you can afford the long-term care insurance you are contemplating.
For more information, please contact Indian River Financial Group.
