You might have planned for a career, a family, or retirement, but have you considered planning for a time when you can no longer complete everyday tasks? You might not like to think about that. You could function well into your golden years. Planning ahead for a potential disability or age-related decline, however, can minimize costs should the need for long-term care arise.
What Is Long-Term Care?
The National Institute on Aging defines long-term care as involving “a variety of services designed to meet a person's health or personal care needs during a short or long period of time. These services help people live as independently and safely as possible when they can no longer perform everyday activities” themselves.
Why Is Long-Term Care Planning Important?
In 2016, the U.S. Department of Health and Human Services (HHS) estimated that nearly half of Americans turning age 65 will develop a disability severe enough to require long-term care.
You might not be able to rely on loved ones for care if you suffer serious injuries from an accident, experience dementia, or become gravely ill.
And if you need long-term care, it's hard to predict how much you will pay. Long-term care planning can help limit your costs, which can exhaust savings and often aren't covered by traditional health insurance.
It can be easier to make major decisions about long-term care when it's not urgent -- yet it can be hard to plan for it yourself.
What Should a Long-Term Care Plan Include?
Consider the housing you might need, the legal protections -- your estate planning requirements -- and how you'll pay for long-term care. Another important consideration is the future of the long-term care industry itself, which began to shift even before the COVID-19 pandemic.
Housing: Will you be able to continue to live at home or will you need to move, especially if you can't do things by yourself or with help? Depending on your capacity, non-traditional housing options include everything from a retirement community to a nursing home. With staffing shortages, the closing of some assisted living facilities, and other changes, housing solutions may continue to evolve.
Legal: An estate plan isn't just concerned with asset distribution, your final wishes, and end-of-life care. It also protects your financial future, including the possible need for long-term care.
Financial: HHS estimates that on average, an American turning age 65 today will incur $138,000 in future long-term care costs, which could be financed by setting aside $70,000 now. Families could end up paying about half of the costs themselves out-of-pocket, with the rest through public programs and private insurance. While most people with long-term care needs will spend relatively less on their care, about one in six (17 percent) will pay at least $100,000 out-of-pocket for future care.
Genworth's Annual Cost of Care survey reports that in Maine, the average price of a year of care for a private room in an assisted living facility is $71,298, a 15 percent increase since 2019. Nursing home care averages $115,705 for one year. Costs will likely continue to rise.
Long-term care payment options include:
• Out-of-pocket or from savings
• Adding an investment for long-term care to an existing retirement account
• Long-term care insurance (the cost of premiums may increase with age)
• Government/public programs: Medicare and Medicaid/MaineCare:
• Medicare: This federal program offers limited long-term care coverage for rehabilitation and skilled services.
• Medicaid/MaineCare: Medicaid helps reduce care costs and covers most long-term care services; however, you must meet asset restrictions and eligibility requirements. Plans and coverage differ from state to state. States may decide to restrict the benefits they cover.
Care costs can deplete cash or retirement savings; hence, investment or buying long-term care insurance may be better alternatives the earlier you plan. If you can meet the application requirements, Medicaid may also be a viable option.
Elder law attorneys can assess your needs and advise you based on your situation. I often tell clients that I wish they had come to see me years earlier. Proactive planning is better than waiting until a crisis. Even if you do find yourself in a crisis, spending lots of money on long-term care, an elder law attorney may still be able to help you. Contact us online or call us today: (207) 377-6966.
