Thursday, July 9, 2015

Long Term Care: What You Need to Know

With Baby Boomers beginning to reach age 65, the topic of long term care is drawing increasing attention. Unfortunately, long term care is often misunderstood and, as a result, is poorly planned for, if at all.

Long term care refers to a range of services from home health care, to assisted living, to skilled nursing homes. These nursing homes provide assistance and support to manage and meet personal and health needs. Long term care does not always refer to medical care, it may simply be to provide assistance with “Activities for Daily Living”, or ADLs, including eating, bathing, dressing, toileting, transferring, or continence. Long term care may be needed for weeks, months or years.

Recent estimates predict that 50% of Americans will need some type of long term care during their lifetime. For couples over age 65, the statistics indicate there is a 70% chance one partner will need long term care.*

The cost of long term care is even more staggering, as Medicaid currently spends in excess of $106 billion on long term care – and still only covers about half of all long term care spending. The average annual cost of a semi-private room in a nursing home is nearly $75,000.**

What is surprising to many is that Medicare, Medicare supplements and traditional health insurance do not cover the cost of long term care, leaving the retirement plans of many Americans exposed to the risk of depletion. The best action to take is to plan for it long before you need it, including understanding the risks, costs and insurance options.

In addition to the financial considerations, a long term care plan should include planning documents and instructions, determining a care advocate in advance, planning for end-of-life, legal documents and arrangements as well as providing financial information for future care costs. It should also provide a repository of resources for caregivers and coordinators, copies of checklists for all those involved in providing care and a statement making your wishes known.

Long term care is very important and should be discussed with your family and financial planner. At Kemp Harvest Financial, we continue to keep this in mind when it comes to your retirement strategy. We are here to help you evaluate the options for long term care, and how to prepare yourself financially in advance. If we at Kemp Harvest Financial Group can help you in any way with regard to your financial planning needs, please feel free to contact us.

For more topics like this, check out our radio show “Retirement Plain and Simple” every Saturday morning at 8 on WNPV 1440 AM and like us on Facebook!

* "Long-Term Care Insurance: A Piece of the Retirement & Estate Planning Puzzle." The Prudential Insurance Company of America, 2011; 

** “Medicaid Long-Term Care Spending Tops $106 Billion.” American Association for Long Term Care Insurance, January 2010;

** “Average Cost of Private Nursing Home Room Tops $75,000 a Year.” ElderLawNet, Inc., 2006.

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Author: Todd Little, CFP®, AIF®

Todd Little is a financial planner with Kemp Harvest Financial.  Todd is a CERTIFIED FINANCIAL PLANNER professional and has a Bachelor of Science degree in Economics from Pennsylvania State University.  Todd is a member of the Financial Planning Association. Additionally, he holds FINRA Series 6, 7 and 63 licenses.  In addition to meeting regularly with clients, Todd works very closely with Mark Kemp and our client service staff to create individual retirement income plans and help our clients navigate the retirement process.