How are you going to pay for long-term care?

  • Most people would prefer to stay out of a nursing home, but that may not be possible without an in-home caregiver.

    Most people would prefer to stay out of a nursing home, but that may not be possible without an in-home caregiver. Stock Photo

 
By Teri Dreher
Posted7/24/2022 7:00 AM

Someone turning 65 today has a 70% chance of needing long-term care at some point, according to government statistics. By 2042, when that 65-year-old is 85, the annual Genworth Cost of Care study estimates the monthly cost of a semiprivate room in an Illinois nursing facility will almost triple, to more than $16,000.

And that assumes an annual inflation rate of 5%, much lower than we are currently experiencing.

 

I know a lot of our readers are already dealing with long-term care for their parents and they may be wondering, "What about me?" Scary stuff, so scary that most of us don't want to think about it, let alone talk about it.

But talk about it we must. "A long-term care event might happen to you, or might not. It might be expensive, or it might not be," says my expert at the family owned, long-term care insurance agency, www.MAGALTC.com (Murray A. Gordon & Associates) in Bannockburn. "The best way to deal with the uncertainty is to plan for it."

With a plan in place you're better able to preserve your assets, standard of living and independence. Here are some strategies that you may want to consider.

Family caregivers

The U.S. Centers for Disease Control and Prevention estimates that unpaid caregivers provide care worth $470 billion a year and are keeping millions of people out of long-term care facilities.

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Most people will tell you they much prefer remaining at home as opposed to going into nursing care because it's familiar and comforting. As a patient advocate, I try to keep my clients out of nursing facilities because of the risks, such as infection, lack of activity and pressure wounds. Many facilities these days are woefully understaffed.

Many family caregivers find the work rewarding because it's an expression of love. If there's a spouse, child or other family member who's willing to step up and help you with your long-term care needs, consider yourself lucky. But don't think of it as "free." Discuss with your family before the need arises whether you or other family members are willing to compensate the family caregiver, as many have to sacrifice work hours and savings to provide care to their loved one.

Another option is setting up a multigenerational household, which is a growing trend. One in six Americans are living with parents, grandparents or other relatives, which keeps needed care close at hand.

Long-term care insurance

Long-term care insurance (LTCI) is often associated with nursing homes, but a good policy will provide home-based care as well. The industry has undergone radical change over the past couple of decades. Insurance companies found out they weren't charging large enough premiums and the cost of care was higher than they expected, so they exited the business, leaving fewer carriers in the marketplace.

                                                                                                                                                                                                                       
 

I recommend buying LTCI earlier rather than later, especially if it's offered by your employer. Plus, if you sign up when you're in your 40s, or even 30s, premiums tend to be more affordable.

The older someone is the more difficult it is for them to meet LTCI underwriting standards. Because long-term care insurance companies do not fall under the Affordable Care Act, they are allowed to base their pricing decisions on preexisting medical conditions. So if you're already in your 40s or 50s, it's time to consider LTCI.

But work with an expert. Long-term care planning is complicated, and it's part of your overall financial plan. With many insurance companies, policies and options to consider, navigating long-term care planning can be a very confusing process.

Medicaid

Medicaid, the federally funded and state-controlled health care program, is the fallback position for many who find they or loved ones need long-term care because, unlike commercial health insurance and Medicare, Medicaid covers long-term care -- including both nursing home care and many home and community-based services and supports.

But it can be a challenge to understand how the program works, what it covers and who qualifies, especially because requirements vary by state and differ based on an applicant's medical needs and financial situation.

To qualify for Medicaid, you must meet certain financial and medical eligibility requirements. Assets are considered, but certain ones are exempt: retirement accounts, a primary vehicle, a primary residence up to a fixed value and personal property. I've worked with many clients to ensure they are eligible under Medicaid to receive the skilled nursing or at-home care they need.

Like a lot of things when it comes to our health, a little bit of advance planning can make a big difference down the road. Make it a priority to discuss your potential long-term care needs with your family, financial adviser or LTCI expert.

• Teri Dreher is a board-certified patient advocate. A critical care nurse for 30+ years, she is founder of NShore Patient Advocates (www.NorthShoreRN.com). She is offering a free phone consultation to Daily Herald readers; call her at (847) 612-6684.

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