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; http://www.prudential.com/media/managed/Consumer_Research_2011.pdf
** “Medicaid Long-Term Care Spending Tops $106 Billion.” American Association for Long Term Care Insurance, January 2010; http://www.aaltci.org/news/long-term-care-insurance-news/medicaid-long-term-care-spending-tops-106-billion
** “Average Cost of Private Nursing Home Room Tops $75,000 a Year.” ElderLawNet, Inc., 2006. http://www.elderlawanswers.com/resources/article.asp?id=5686§ion=4&state=
** “Medicaid Long-Term Care Spending Tops $106 Billion.” American Association for Long Term Care Insurance, January 2010; http://www.aaltci.org/news/long-term-care-insurance-news/medicaid-long-term-care-spending-tops-106-billion
** “Average Cost of Private Nursing Home Room Tops $75,000 a Year.” ElderLawNet, Inc., 2006. http://www.elderlawanswers.com/resources/article.asp?id=5686§ion=4&state=
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Author: Todd Little, CFP®,
AIF®