When you were serving in the military, you had to pass an annual test designed to test your muscular strength, endurance and cardiovascular respiratory fitness. Your physical fitness was most likely at its all-time peak back then. However, someday the growing number of candles on your birthday cake may impact your health and wellness. Will you be ready?
In the future, your ability to perform one or more of the most basic “activities of daily living” may challenge you. These ADLs include bathing, dressing, eating, toileting or getting in and out of bed. Before that time, you may lose the ability to perform one or more “instrumental activities of daily living” or IADLs, to include household chores, meal preparation or managing your finances. Consequently, you may require some form of outside assistance, whether in your own home, an assisted living facility or a nursing home.
This care is also expensive. In 2018, the national median annual cost for home health care was $48,048 for homemaker services and $50,336 for a homemaker health aide. Need assisted living? Expect to spend $48,000 annually for a private one-bedroom apartment. Skilled nursing care runs even more at $100,375 for a private room. Do you have the personal and retirement savings to pay these bills and, if yes, for how long?
Do Nothing Default
We all know it is “other folks” who will need some form of long-term care assistance. Right? The odds are not actually in your favor, if denial is your default long-term care strategy. Why? Roughly 70 percent of Americans over age 65 will require some form of long-term care. Unless you have a plan now to pay the very real costs later, the only thing your children may inherit is you.
Medicare & Medicaid
Do you think Medicare will pay for your long-term care needs? So, do 70 percent of your fellow citizens. If this is your plan, you (and they) will very be disappointed. Medicare only provides limited coverage for certain “skilled care” in an approved nursing facility, not for “custodial care” assistance with the activities of daily living.
Medicaid does cover custodial care without the arbitrary time limits, burdensome co-pays and red tape associated with Medicare. On the other hand, Medicaid eligibility is subject to strict income and asset limits. Although many people try to get around these limits, by transferring assets to family members, any such transfers made within 60 months of applying for Medicaid will trigger a penalty period of ineligibility.
Certain wartime service veterans (and their spouses) may qualify for a needs-based pension. In addition, these qualifying veterans, who also are in need of long-term services and supports (LTSS), may be further eligible for “Aid & Attendance” and other needs-based benefits administered by the Department of Veterans Affairs. Because eligibility is “needs-based,” the VA will penalize any gifts and other transfers of resources for less than fair market value that occurred in the three years prior to applying for needs-based benefits.
Just like you have insurance to cover the risks to your automobile, home, and life, long-term care insurance (LTCi) is a responsible way to cover the likely and catastrophic risk of needing long-term care. These policies pay for in-home care, assisted living care and skilled nursing care. There are “traditional” LTCi policies that pay a daily amount for a designated length of time and “hybrid” LTCi policies that are really life insurance with a long-term care rider.
Given the range of possible options, what is your long-term care strategy?
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