Long Term Care- Know Your Costs and Options

According to the Center for Medicare and Medicaid services, 70% of people over 65 will need long term care support at some point.  Since health insurance and Medisupp policies do not pay for long term custodial care (Medicare only pays for up to 100 days of care in a skilled nursing facility), it is important that you have a plan to fund these costs, which can be exorbitant.  You can choose to self-fund by spending your own assets or purchase a long term care policy.  A less desirable option would be to rely on family members.

Many people also incorrectly believe that they can rely on the government through Medicaid to take care of them should they require long term care.  Unfortunately, this option is also not favorable.  In order to qualify for Medicaid eligibility, a patient must demonstrate that they have very little income and limited assets.   This will occur once they spend down almost all of their cash and investments.  If they have a spouse, he or she will be left destitute.  In addition, the Medicare facilities that are available in your state, may not be ideally located cost to family members nor provide the quality care you desire.

In order to gain some insight into the potential cost for care, Genworth publishes an annual cost study.  The Genworth 2014 Cost of Care Study summary is detailed below for the US (median) and the state of SC.

Genworth summary of Long Term Care costs 2014

Genworth cost of careNationalState of SC
Homemaker services*$43,472$40,040
Assisted Living Facility$42,000$34,485
Nursing Home
   -Semi-Private Room$77,380$67,525
   -Private Room$87,600$73,000

*assumes 44 hours a week for 52 weeks.  This will be higher if round-the-clock care is needed.

Given the above costs and the average length of a long term care event (3 years), a 65 year old couple from SC will need roughly $180,000 in extra assets now to fund the possibility that one of them will need nursing home care.  This assumes 6% rate or return and 5% LTC inflation.

As the Baby Boomers age, we will see an epidemic of dementia patients.  According to a recent article in Investment News, one out of ten men and one out of five women will suffer from some form of dementia.  Furthermore, half of individuals over 85 are at risk of developing Alzheimer’s.   Future medical advances may help reduce the risk, but at this point, there is no cure for Alzheimer’s.  It is also much harder to care for an Alzheimer’s patient and can require 24 hour nursing care in the latter stages of the disease.

Although we don’t want to talk about being old and fragile and we don’t believe we will ever be infirm, it is important to have this discussion with our spouse or family members in order to determine the best plan, if and when we do need care.  If you are interested in knowing what your available options are to help fund a potential long term care event, please give me a call at 803-331-3721.

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