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What is Long-Term Care Insurance?

Everyone has heard about this problem. People are living longer, medical care is getting more and more expensive, and a substantial amount of seniors will end up needing long-term care. Privately funding your own long-term care or leaving your spouse or family members to pay for long-term care can result in extreme financial burdens on those responsible for your care. So, to be proactive and responsible for your or someone else’s future, let’s look at long-term care insurance.

Long-term care insurance has been quite the buzz lately. Since it is a very likely possibility that you or your loved one may need long-term care, it is important to obtain a policy before you already need care or is at a poor health state. Many long-term care insurance policies require medical underwriting. Long-term care insurance acts as a daily reimbursement (with a limit) paying for daily living assistance, hospice care, nursing facilities, assisted-living facilities, and nursing care. Since every policy is different, take into consideration what is actually covered by your policy when purchasing long-term care insurance. The duration of the long-term care insurance may be for a set amount of years or for the rest of the insurer’s lifetime.

Once you decide to use the long-term care insurance benefits, your insurance company needs to determine that you are eligible. Although different companies have different criteria, generally how impaired you are on your daily living activities and your cognitive mental state is the determinant of eligibility. Once the insurance company approves that you are indeed in need of care, there is a elimination period, which is the time that must pass before you are actually able to receive your benefits. Elimination period is selected when you purchase your insurance.

There are a lot of things to consider when purchasing long-term insurance. Research different insurance companies and their benefits, weigh your pros and cons, and prepare for the future!

References:

1 . http://longtermcare.gov/

2. Mark Diamond, National Speaker and Senior Advocate

mark diamond arizona, mark diamond senior education counsel, Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

Medicare, Medicaid

Medicare, Medicare, Medicaid. We talk about it and hear about it, but it never seems like we’ve completely grasped what they are and what they do. So, let’s dive into some facts to understand what they are, what they do, and what the difference is between the two.

Medicare is a health insurance that is designed to help people who are either 65 years or older, or have certain disabilities even if they are under 65. People who have End-Stage Renal Disease of any age are also eligible for Medicare. Medicare helps cover inpatient care, hospice, nursing facilities, usually without a monthly premium. With standard monthly premium, Medicare also helps cover outpatient, home health, and services from doctors and health care providers. Medicare also contracts with private insurance companies to provide extra benefits, as well as help cover prescription drugs.

Medicaid, on the other hand, is a joint program between the states and the federal government that helps cover medical care of people who have limited income. Medicaid may provide additional coverage that includes Long-Term Care and personal care. Eligibility for Medicaid depends on the particular state you live in, but can include requirements such as age over 65, children under 19, pregnant women, and disabled persons. Medicaid may cover primary care, in hospital care, preventative care, mental health services, pregnancy care, and medications.

It is also possible to qualify for both Medicare and Medicaid, which is called “dual eligibles.” For more information on qualifications and coverage, visit https://www.medicare.gov/ and http://medicaid.gov/.

References:

  1. Mark Diamond, National Speaker and Senior Advocate
  2. https://www.medicare.gov/Pubs/pdf/11306.pdf
mark diamond arizona, mark diamond senior education counsel, Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

How do you Finance Nursing Homes?

In 2050, more than a fifth of the population in the United States will be 65 years or older.1 This means more people will be limited physically and cognitively, which also means that more and more people will need assistance and likely end up in nursing homes. Nursing homes, which are basically 24-hour senior care facilities, vary in terms of cost and services provided. Nursing homes are licensed by its residing state as providing a certain level of personal and nursing care to its residents.

Knowing that there is a high probability that you or one of your loved ones will end up in a nursing home, it is critical to understand how to finance the cost of supporting someone who is living in a nursing home. Private or public support can be pay for nursing homes. Major payers for long-term services and support are Medicaid and Medicare, as they pay for two thirds of the total cost.2 They are also funded by private insurances, federal and state programs for the elderly, and private donations.

Medicare pays to cover short-term (3 months or less) rehabilitative care for those recovering from acute conditions, while Medicad and private long term insurance covers long-term care (3-5 years for private insurances, indefinitely for Medicaid).1

Most people do not prepare for their long-term care needs, which is a growing problem in the United States as more and more people require long-term care. This may end up in families and beloved ones covering the cost if the supported is not eligible for Medicaid or Medicare and not supported by private insurance. Therefore, it is critical to start thinking early in terms of retirement and possible long-term care needs for you and your spouse. The more prepared you are, the less you’re going to have to face when you retire.

References:

  1. Congressional Budget Office, Rising Demand for Long-Term Services and Supports for Elderly People (June 2013), http://www.cbo.gov/sites/default/files/44363-LTC.pdf
  2. Congressional Budget Office, Dual-Eligible Beneficiaries of Medicare and Medicaid: Characteristics, Health Care Spending, and Evolving Policies (June 2013), www.cbo.gov/publication/44308
  3. Mark Diamond, National Speaker and Senior Advocate
mark diamond arizona, mark diamond senior education counsel, Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

Changing the Way You Think about Retirement

When it comes to retirement planning, what comes to your mind? It may require changing the way you think about retirement to best protect and preserve your wealth. You might be familiar with Social Security benefits, 401k, annuities, etc. You might even have taken a couple of seminars or is reading articles from various websites on what it takes to retire. For most people, retirement is a scary subject. Especially with the amount of money that you are “supposed to” target before retirement, people mostly shake their heads and sigh deeply.

Here is a new way to look at retirement that might revolutionize your planning thought process: stop thinking about the net worth of your retirement savings. If you successfully put away the amount of retirement savings that you planned to, what will be your monthly income? According to a Harvard Business Review article by Dr. Robert Merton, professor at MIT Sloan School of Management, what’s most important in approaching retirement is not the net worth but the monthly income.1

So what does this mean? According to Dr. Merton, you should be investing in a mix of both risk and risk-free assets that increases the chance of achieving your goal. Risky assets are mainly equities that are looked at in terms of income, and the risk-free assets should be annuities.1 This does not mean that you need to purchase annuities right away, but that you have your portfolio managed well enough to purchase the annuities on retirement, irrespective of inflation or interest. With retirement comes your retirement savings. Following this strategy will allow you to plan out a retirement that helps you to achieve the desired monthly income during retirement.

References:

  1. Merton, R. C. 2014. The Crisis in Retirement Planning. Harvard Business Review92(7/8), 42-50.
  2. Mark Diamond, National Speaker and Senior Advocate
Senior Education Counsel, a nonprofit Since 1995, Arizona, California and North Carolina Mark Diamond, national senior advocate

Options for Long Term Care?

Senior couple educating themselves on long term care optionsLifespan has exponentially increased with the advancement of science and technology. While some people can maintain their health for many years, with greater longevity comes the need for better and longer care. This means as people age, there is a greater demand for social programs designed to act as a safety net, such as Medicare and Social Security, as well as strategies to cope with the increased cost of living longer. So, what options do I have for long term care?

The following are five ways to cover the costs of long-term care:

1) Medicare / Medicare Supplements: For those looking to mitigate the costs of their long-term care, one possible avenue is relying on Medicare and Medicare supplements. Medicare can pay for up to 20 days of health care, per condition, per lifetime, and some Medicare supplements can cover up to 80 days. However, participants should check their contracts to make sure these are available.

2) Self-Funded: If you’re lucky enough to have a sizable nest egg, retirement fund, 401 (k), or some other pool of saved money, self-funding or private care might be an option. This is referred to as “spending down.” That said, this could be a costly option, especially as both life expectancies and the odds of needing more involved long-term care increase.

3) Veteran’s Administration: For those who have served in the military, the Veteran’s Administration offers a number of different options for long term care. However, a common problem is that many veterans do not qualify for nursing home benefits, making this option even more precarious and narrow. The best course of action is to consult a VA attorney.

4) Insurance: Long Term Care Insurance offers a great deal of options, protecting against a wide range of needs attached to longer life and extended health concerns. Insurance can be obtained for everything including home health care, assisted living, residential care facilities, and a skilled nursing facility.

5) Medicaid: The 5th and final option in many cases is seeking state paid assistance via the Medicaid program. Those who would utilize Medicaid will have to navigate an application process that includes medical eligibility, a comprehensive financial review of your assets and resources, income eligibility that includes share of cost as well as potential state recovery.

Ideally, you’ll want to come up with a plan for paying for long term care well before you need it. The language used for policies and programs can be tricky and difficult to understand. Sources such as Mark Diamond and Senior Education Counsel have the expertise to help assist you in determining which option is best.

Reference:

  1. Mark Diamond, National Speaker and Senior Advocate