Planning to Pay for Long Term Care

This expense can be the most devastating expense you will incur in your lifetime and the one expense Americans least plan for.

The average cost of a Nursing Facility is estimated at nearly $206 a day or $75,190 per year with the average stay being 3 years or more.

The average cost of Assisted Living is estimated at nearly $2,968 a month or $35,616 per year.

Ironically, home care can cost nearly as much or even more than facility care if you require round the clock care. For instance, the average cost for a nurses visit is $19 an hour.

These figures do not account for the rising cost of health care due to inflation.

The fact is many families spend their entire life savings within one year of using long term care services. The cost of your house is the only greater expense you may incur in your lifetime.

Source:
1. MetLife Mature Market Institute, The MetLife Market Survey of Nursing Home & Home Care Costs, Sept 2006
2. MetLife Mature Market Institute, The MetLife Market Survey of Assisted Living Costs, Oct 2006

Long Term Care Insurance - don’t leave this critical protection out of your Estate Planning

One of the most important parts of any properly designed estate plan is to have a Long Term Care Insuarnce policy in place.  At this point in your life you most likely have all of your finances in order including having your portfolio properly protected from market changes. 

Sadly, far too many Americans still have far too much risk in their estate plans.  The missing element that can literally wipe out your estate is having to pay for extended periods of care as we age.  A fantastic way to mitigate this risk is by having a properly designed Long Term Care Insurance policy in place.

Long Term Care Policies are becoming more and more popular every year and more popular with the last of the baby boomer generation.  Take this simple self test regarding paying for the costs of Long Term Care.  At today’s rates the average nursing home costs approximately $6,000 per month or $72,000 a year.  Now take your liquid assets and divide that number by $72,000.  This will give you how many years your estate would last if you needed extended care.  If you are married, take the number of years and divide that number by two…since there are two of you to pay for.  Pretty scary huh!

This little exercise can be an eye opener for most.  And that was based upon today’s costs.  Is your portfolio growing at the rate of health care costs?  Hopefully so, if not, then your assets could be depleted that much faster.

The solution to protecting your estate is to have a properly designed Long Term Care Insurance Policy in place.  Several large insurance carriers offer these great plans such as Allianz, Genworth, John Hancock and MetLife. 

Thankfully, most qualified Estate Planners understand the value of having this type of plan in place.  You can read a great article from Bacon/Wilson, Attorneys at Law, on this subject here.

Get a fast, easy, and free quote on Long Term Care Insurance of all types. Please click and fill out the form for a no-obligation long term care quote.

 

What’s the correct Long Term Care Policy daily benefit amount?

I’m often asked when meeting with clients “what daily benefit dollar amount should we select?”.  The quick response is “as much as you can afford”.  The policy price is determined by your health rating, length of benefits and of course, the amount of that daily benefit.  When Long Term Care policies first came out years ago most agents were recommending $100/day.  With the cost of care increasing with inflation, the amount you should select now really depends on your financial situation, age, geographic location.  If you are in a metro area and plan of retiring in an high cost of living area then a higher daily benefit will help.  A good way to do a little homework is to call a local nursing home.  If the going rate in your area is $6,000 per month…and you divide that by 30 days then we know $200/day would cover most of your costs today, assuming you add inflation protection to your coverage (which is a must for anybody purchasing a policy that is less than about 72 years old).  I typically recommend a range of $150/day to $220/day depending on your assets, age, and where you plan on retiring to.  Also, if this policy will be your only way to cover your long term care costs…then a higher daily benefit is needed.  If you have substantial assets and this policy is going to be used to mitigate most of your costs….then you could select a slightly lower daily benefit.  $200/day is typically what most of my clients purchase today.

Get a fast, easy, and free quote on Long Term Care Insurance of all types. Please click and fill out the form for a no-obligation long term care quote.

Long Term Care Health Insurance

Get a long term care insurance quote

There are four policies everyone should have if possible. These are life, health, disability and long term care. These four policies will cover everything life throws at you, life insurance for taking care of things after your death, health insurance for taking care of you if you get sick or injured. Disability insurance protects you if you are injured and are unable to work either temporarily or permanently and long term care takes care of you if you end up with a disability or illness that prevents you from being able to take care of yourself.

Considering what each one of these would cost you on a monthly basis you may be asking yourself why should you pay out all this money for life, disability and long term when it chances of you needing it are significantly less than you needing health insurance.

While there is the chance that you may not actually need long term care insurance take a look at what the costs of long term care. These costs are estimations and may vary based on additional factors such as location and facility type. On average for a semi private room at a nursing home you can expect to pay somewhere in the neighborhood of $68,000. For home care which consists of visits about 3 times a week, you are looking at about $18,000 a year.

Of course, these numbers can vary significantly depending on a variety of different factors such as how much care you need, what type of care you need, who you are receiving the insurance through and where you are located. There are also different rates for home care visits on weekends, holidays, how long the visits are, and then there are community programs such as adult day service.

Now that you have an idea of how expensive this type of service can be you may be able to see why there is a need for this type of insurance policy. Another thing is that many people believe that Medicare will help to provide for long term care.

Well, they do provide for it under certain situations such as when you need skilled medical services or recuperative care. It does not however pay for the majority of the activities which are covered under long term care insurance. These are the daily living activities such as eating and bathing.

Medicaid provides for more than Medicare but you have to meet the criteria for income and functionality which may be difficult for most people to meet. There are other programs which assist in long term care but they are usually for highly specific populations.

Based on this the average individual can not afford to pay for these services out of pocket based on retirement income and unless criteria are met there are no public assistance programs that will assist with these expenses. The expense of unaided long term care alone is well worth the consideration of purchasing this type of protection. Not only is cost a considering factor but also the piece of mind of knowing that should a situation that requires long term care arise you and your family are protected and you can be assured of the getting the care you need.

Get a fast, easy, and free quote on Long Term Care Insurance of all types. Please click and fill out the form for a no-obligation long term care quote.