The news has covered the ballooning costs of health care at great length. In fact, a recent study shows the average American couple pays $265,000 in health care premiums (not to mention out of pocket costs) after age 65 (www.hvsfinancial.com/PublicFiles/Data_Release.pdf). That is A LOT to most, if not all people!
Part of the challenge of growing older is not being able to predict potential changes in our health. This is why long-term care (LTC) planning is so important. LTC planning focuses on planning ahead for care needs and associated costs. With the baby boomer generation just here, long-term care costs are an area of concern for our society. A USA Today article in 2015 highlighted that over eight million Americans required the use of long-term care services in 2014 (http://www.usatoday.com/story/news/nation/2013/12/12/long-term-care-elderly-alzheimers/3990853/). Medicare’s website additionally sets forth the statistic that 40% of people who reach the age of 65 will eventually need to reside in a nursing home. Needless to say, long-term care is headed towards exponential growth and as a result should be on every family’s radar.
Long-term care refers to the services provided by at least one person (either a medical professional or a layperson such as a spouse or child caregiver) to individuals in need of help with activities like walking, cooking, doing laundry, rehabbing an injury, and traveling. Long-term care may be temporary or continuous. For example, someone may receive temporary long-term care while recovering from a fall, whereas continuous LTC is necessary for a person moving into assisted living or a nursing home due to late stage Alzheimer’s or dementia.
Here are a few things to keep in mind about long-term care: First, if you think you can delay or avoid long-term care planning because the government provides Medicare and Medicaid, think again. Medicare covers a limited amount of long-term care (up to one-hundred days), and Medicaid will be available only after significant depletion of assets. In fact, the overwhelming majority of medical expenses over the course of retirement are paid through private insurance or directly out-of-pocket. Second, if you plan on joining the roughly three-quarters (75%) of people who provide long-term care via unpaid family member care, be aware of the demands that it places on the family member. As health needs become more complex, the time investment and stress increases, which may lead to caregiver health issues and lower quality of care. Evidence of this stress can be seen in spouses who provide care for each other, because there is a 67% higher chance that the caregiver spouse will predecease the spouse in need of care.
There is good news for us here in Minnesota. A recent study by AARP ranked Minnesota as the best (yes, #1!) provider of LTC in the country in terms of quality and availability (http://www.longtermscorecard.org/). While cost is still a concern, this is a positive thing to note for families, seniors, caregivers and Elder Law Attorneys that call Minnesota home.
As you can see, it is crucial to meet with an Elder Law Attorney in your state about long-term care planning. The attorney will examine your personal and financial situation and advise you on the best ways to manage your assets in preparation for potential changes to your health status. Whether it means purchasing long-term care insurance before you retire, legally spending down for Medicaid qualification, or any other type of necessary preparation, it is smart to learn how to protect your assets, your loved ones, and yourself by developing a plan before something happens.