Long Term Care Funding Alternatives
What is Long Term Care?
It is, basically, a service which helps to care for people who cannot care for themselves for an extended time period. You may think of residents in a nursing home. However, long term care can also be provided in less restrictive assisted living centers, adult day care, or even, at home.
In fact, there are estimates that 70% of people who require long term care do get it at home by family members or paid care givers. But even care at home has a cost. Caregivers must be paid. If a family member can perform the care, they may have to lose income and incur extra expenses.
What is the Need For Long Term Care?
The US Department of Health and Human Services estimates that 40% of people who are turning 65 now will need long term care at some point in their lives. The very fact that people in western nations enjoy longer lives increases the risk of requiring long term care.
Who Pays For US Long Term Care?
Many people have the mistaken idea that Medicare will pay for nursing care. However, Medicare only pays for short term care! It will continue to cover medical services of residents in a nursing facility, but will not cover all the costs over a long period of time.
Medicaid pays for long term nursing care, but certain conditions must be meant. It generally requires that beneficiaries have a very low income and few assets. Eligibility and covered services vary from state to state. Most often, eligibility is based on income and personal resources. This means that the individual must spend down most of their assets and savings in order to be covered.
Long Term Care Insurance
Long term care insurance (LTCi) is a type of health insurance that covers extended nursing care. There are many different type of LTCI policies. The type of care, the length of stay, daily limits, etc. are specified in the policy. To learn more about LTCI, read Pros and Cons of Long Term Care Insurance.
Long Term Care Funding Alternatives
There are some alternative ways to plan for funding a long nursing stay. Keep in mind that the costs can top $50,000 a year or more. It is a dilemna. How can you plan for this cost that you may or may not incur without going broke right now?
Some retirement annuities have a clause (or even embedded long term care insurance) so they can serve double duty as a retirement savings product and a form of protection against the costs of long term care needs. A good insurance agent should be able to help you compare and contrast some alternatives – i.e. nursing insurance vs. annuities with nursing provisions.
If you are interested in nursing care insurance, you may want to compare policies and prices so you can make an informed decision. You can compare the costs of long term care insurance here.
Who Should Worry About Nursing Care Planning?
Very poor people will not have as much to lose by counting on Medicaid, though there are some risks. People with lots of assets may be able to self-fund nursing care, though they do risk losing a lot of their assets to pay for it. As with many other issues, this tends to strike the middle class the most. Middle income people risk losing a lifetime of savings if they have to pay for extended nursing care.