FINANCIAL PLANNING FOR HEALTH CARE NEEDS

Betty Doll, MBA, CLTC

Local newspapers, national journals and financial publications have all recently carried articles regarding the changing demographics in the United States, the rising costs of health care and the limitations of our Medicare and Medicaid systems. As more Americans reach their 50’s and beyond, they are considering a range of products and services that can keep them healthier and well cared for in later years.

As individuals plan for retirement, there is one challenge that many fail to plan for. That is the need to protect oneself from the financial drain of an extended disability, disease, or illness. Statistics show that at some point in our lives almost half of us will require extended health care services usually at home but sometimes in a long term care facility.

The cost of these services is surprising to many. A recent survey conducted by MetLife indicated that the average cost of having a health care aide come into your home is over $17-20 per hour. Skilled nursing care can exceed $200/day. That’s over $73,000 per year. With costs like this, a person’s savings and investments can be depleted rapidly.

It is important to understand that the costs of extended home health care, assisted living or nursing home care are not covered by your private health insurance or by Medicare. These only cover what is determined to be skilled care—care that is rehabilitative in nature. That means that the care is going to make you better. Most care provided in the home and care facilities is considered custodial in nature—help with daily activities such as bathing, dressing, eating, etc. These are not covered by traditional health insurance or Medicare.

Long Term Care (LTC) Insurance was developed to provide coverage for extended care services. Comprehensive policies enable you to receive care at home or in a facility if needed. They do not have the stringent eligibility requirements and limitations of Medicare or Medicaid. They enable the individual to make their own choices regarding the type and location of the care provided. It allows the individual to remain in control of their health care choices.

Individuals ages 50 to 70 are the typical purchasers of LTC policies although coverage is available to those who are younger and those who are older. People in their 50s and 60s are typically planning for retirement and view LTC as an important part of the financial planning aspect of retirement. Many of these individuals have had responsibility for caring for an aging parent and wish to make provisions for their own care. Many voice a desire to not put their children in the situation of taking responsibility for their care.

New options available now include both life insurance policies and annuities that can be used for care if needed. If care is not needed, the death benefit of these policies is paid out to the beneficiaries. New tax laws have made these options even more attractive. Some options are available even for those who may be uninsurable under a traditional long term care policy.

Each individual has their own needs and desires related to long term care coverage and it is important to work with someone who specializes in long term care and who can help determine the best coverage options for the individual.

Like your homeowners and auto insurance, long term care insurance is there for peace of mind. The hope is always that it will never be used. While planning for possible future health care needs can be a difficult emotional decision it is an important financial decision and a critical part of retirement and estate planning.

and wish to make provisions for their own care. Many voice a desire to not put their children in the situation of taking responsibility for their care.

New options available now include both life insurance policies and annuities that can be used for care if needed. If care is not needed, the death benefit of these policies is paid out to the beneficiaries. New tax laws have made these options even more attractive. Some options are available even for those who may be uninsurable under a traditional long term care policy.

Each individual has their own needs and desires related to long term care coverage. It is important to work with someone who specializes in long term care and who can help determine the best coverage options for the individual.

Like your homeowners and auto insurance, long term care insurance is there for peace of mind. The hope is always that it will never be used. While planning for possible future health care needs can be a difficult emotional decision it is an important and critical part of retirement and estate planning.

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