If you live to be 65, the chances that you will need some sort of long-term care at some point is about 68 percent, and if you do need long-term care, you’ll probably need it for about three years. This may surprise you, as you may think of long-term care as just a lengthy stay in a nursing home. In reality, many things can qualify as long-term care, and there are tons of “risk” factors that make it more likely you’ll need it. Here’s how to assess your long-term care needs and how to begin to think about covering the costs (which could be substantial).
Assessing Your Future Needs
It’s impossible to predict the future. What you can do, however, is make some smart guesses based on your current health, your genetic markers, and how much support you have in your family and social circles.
While accidents and sudden illnesses can affect even the healthiest of people, as a general rule, the likelihood you will need long-term care is smaller if you are a healthy person. Obesity, diabetes, high blood pressure, chronic pain conditions, long-term illnesses, smoking, excessive alcohol consumption, bad diet, and lack of exercise are all risk factors for needing long-term care in the future. Any genetic predispositions to particular maladies are also risk factors.
Make a list of all your risk factors. Ignore the things you cannot change (parent with cancer, for example), but highlight the things you can change. Make a plan to begin to address your health problems and poor lifestyle choices. Understand what long-term care actually means. Yes, nursing homes and assisted living facilities offer long-term care for seniors, but other senior care choices exist. Adult daycare, in-home nursing, live-in caretakers, and even hospice (in some circumstances) qualify as long-term care.
Covering the Costs
If you’re used to simply making insurance copays for your medical expenses, long-term care may throw you for a loop. Some private insurers cover some forms and lengths of long-term care, but the most popular insurance for seniors — Medicare — does not. Medicare covers short-term acute hospital stays, but not lengthy care. This is why it’s vital that you begin planning right away for how you’ll pay for any eventual care.
Here are some possible cash flow sources sources to consider:
- A chronic illness rider. Some whole life insurance policies allow for additional riders, some of which can cover long-term care. Research your plan or consider buying a life insurance plan now that could help you
cover care years down the road.
- The federal government. While Medicare won’t help with your long-term care, Medicaid may. If you qualify (typically low income-dependent) you can get help this way. Also, if you are a veteran, the VA may be able to assist.
- Start saving now. No matter your age, put aside money for future health bills. You can’t rely on your Social Security checks or your pension to cover years of long-term care.
- Payouts from investments. Your stock annuities, bonds, dividends, real estate payouts, and more can help you finance long-term care.
- Research creative options like using a Roth IRA to pay for long-term care, which can qualify you for specific medical expense tax deductions. Talking to a tax specialist or financial planner is probably a good idea.
- If you need money fast for any reason (lack of planning, unforeseen quick-onset illness), you could consider a reverse mortgage. You’ll give up equity in your home, but you’ll receive monthly payments and be able to forgo your mortgage payments.
- Long Term Care Insurance. This insurance helps pay for the cost associated with care generally not covered by health insurance, Medicare or Medicaid. The requirements for the coverage to kick in: you are unable to complete at least 2 out of the 6 activities of daily living [eating, bathing, dressing, toileting, transferring (getting out of chair or bed without assistance), maintaining continence]. Long-Term Care Insurance usually covers nursing home care, assisted living, in-home care, and other costs associated with long-term issues.
While it would be wrong to call long-term care an inevitability, it’s right to call it a strong possibility for most people who live past retirement age. Your best tool in the bag for handling long-term care needs is smart planning. Start thinking about it today no matter your age or health status. Successfully anticipating your future needs is more than half the battle.