During the course of our working lives we hear much about the importance of planning for retirement. As people are tending to live longer – into their 90s and beyond – we are increasingly concerned with having sufficient assets to maintain our lifestyles into our golden years. One often overlooked component of retirement planning is long term care planning. How many of us who fret over the impact of fluctuations in the market have considered whether our nest eggs can withstand the substantial hit of long term care costs?
The need for long term care can result from a catastrophic illness or just old age. For those who need assistance beyond what their loved ones can provide, the options are home care, assisted living and nursing homes.
So what are the potential costs? Though Florida has many enviable qualities, affordable care is not one of them. In fact, long term care is more expensive here on our narrow strip of paradise than anywhere in the country. Home care costs can easily amount to $300/day. Assisted living facilities start at $4,000 per month for a shared room, with care often billed a la carte. And, the going rate for a month’s stay at a nursing home is at least $15,000.
There are three options to fund long term care: private pay, which would quickly impoverish all but the very wealthy, long term care insurance, and government assistance. Long term care insurance is a great option for those who can afford it and who have the foresight to sign up while they are still healthy. A good LTC policy covers home health care, assisted living and nursing home care. Those planning to stay on Long Island or in the metro area should purchase a policy with a generous daily benefit, inflation rider, and a payout period of at least 3 years.
Many assume that Medicare or private health insurance will cover. Not for the long haul. Medicare and private health insurance typically pay for a limited stay in facility for rehabilitation, with coverage ceasing at the end of the rehab period.
Which leaves government programs like Medicaid, a need-based program, and Veterans Aid and Attendance, available to veterans who have actively served during wartime and their spouses. Both programs have very strict income and resource limits. The good news is that there are planning options to qualify for these programs. A good estate plan may incorporate strategies to qualify for government benefits.
Statistics tell us that there is a strong likelihood that the majority of us will require long term care at some point. A thorough consultation with an experienced estate planning attorney should include a frank discussion of the various options.
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