Top Three Reasons People Don’t Plan for Long Term Care in Retirement

Planning for retirement is something every one thinks about. Choosing a retirement destination, managing retirement accounts, and ensuring there will be adequate income during those years are common actions for people in their 40s and 50s who are looking further down the road towards their future. Planning for long term care, though, is often left out of the equation.

Long Term Care Myths

Somehow, many people plan their retirement quite meticulously, but forget to factor in one of the biggest costs that can hit during retirement: long term health care. There are several different reasons this occurs, and much of it relies on three large myths that exist. People tend to think that someone else will take care of long term care for them, so they don’t bother to do it themselves. Read three of the top reasons people put off planning for long term care below.

1)    If I need long term care, I can depend on a family member or friend to provide it.

This is a nice thought, but it’s a premise based on fantasy. Unless you have explicitly discussed this potential situation with a family member or friend already and they have agreed to provide care for you later in life, don’t count on this. Families spread out all over the country and are often states or countries away, which means they are unable to provide care if and when you may need it. Some family members may be able to provide some care, but just because it doesn’t cost any money doesn’t mean it doesn’t cost anything. Family caregiving is an exhausting, emotionally stressful job that places the caregiver under a lot of stress and responsibility and often leads to guilt on the part of the individual receiving care. Again, unless you have discussed specifics with someone about this type of arrangement, don’t count on someone else to provide you care.

2)    If I need long term care, Medicare will foot the bill.

Another nice thought, but it doesn’t quite turn out as most people expect. A survey conducted last year found that more than 1/3 of adult Americans believe Medicare covers the cost of long term care. In reality, Medicare will only pay for your care if you have a qualifying 3-day hospital inpatient stay. Even then, they will only pay for care for a short period of time, anywhere between 20 to 100 days, depending on your insurance. If you need care for longer than 100 days, you are back at square one, on your own. Neither the federal or state governments have programs set up to address the cost of long term care, so don’t count that as your plan, because it really isn’t a plan at all.

3)    If I need long term care, I can self-insure and cover the cost myself. 

While this might ring true for a few select people, for the majority of Americans, this assumption is dead wrong. Long term care is expensive and the latest Genworth Cost of Care Survey shows just how expensive. One year of care in a nursing home costs an average of more than $87,000. If you live in the Northeast or the West, count on your bill to be much higher than that, possibly even double. The fact is, most people don’t even have enough assets saved to get them through retirement without long term care. If long term care were to enter the situation, their assets would be wiped out. It’s impossible to predict if you will need care and how long you will need it for, so relying on your hard earned assets to cover that cost is a huge gamble. Unless you have several million dollars saved for retirement, self-insuring is not a wise idea.

Make Your Own Plan

Relying on any of these beliefs when it comes to planning for long term care can be dangerous. Unfortunately, most Americans are doing just that. Whether it’s because they think they can’t afford a Long Term Care Insurance policy or they simply aren’t aware of the need for one, few people are truly prepared for the cost of long term care.

Long Term Care Insurance policies can still be quite affordable, especially when you compare it to the actual cost of care. This type of insurance provides tremendous benefits to policyholders; in fact, the industry pays out more than $11 billion in benefits every year. If you are looking for a solid way to shield your assets from the cost of long term care, consider buying a Long Term Care Insurance policy. For a free quote, fill out this form and we will be in touch shortly.

Texas Announces Plans to Combine Medicare and Medicaid Benefits

For people who receive both Medicare and Medicaid benefits from the state of Texas, things might be getting a whole lot easier. The state of Texas just received approval from the federal government to test an idea that would combine the delivery of Medicare and Medicaid benefits to individuals enrolled in both programs.

Why the Change?

Officials say that the combination of the two services could help make it simpler for enrollees to receive their benefits while also potentially reducing costs for both the state and federal governments.

“Combining a person’s Medicaid and Medicare services into one plan makes sense for the consumer and for the taxpayer,” said Chris Traylor, chief deputy commissioner of the Texas Health and Human Services Commission. “We’ll be able to improve the coordination of care, helping people get the right care in the right setting, and we can save money for both the state and federal governments.”

Right now, Medicare pays for the covered services and then Medicaid picks up the rest of the tab afterwards. By merging the benefit services, it could help coordinate communication between the different programs and encourage better management of care that serves both programs, instead of only financially benefitting one. The new idea could help save money because combining the two services would increase the incentive to support policies that reduce the need for hospitalization, thereby cutting back on inpatient hospital stays and institutional care.

Who is Eligible?

400,000 people living in Texas are currently receiving benefits from both Medicare and Medicaid. Those people are eligible for Medicare based on either their age or disability and simultaneously eligible for Medicaid because of their income status. People enrolled in both programs are referred to as “dual eligibles”.

The program will be piloted in 6 Texas counties that include 168,000 of the dual eligible Texans. In order to enroll in the pilot program, you must be at least 21 years of age. The pilot will begin on March 1, 2015 and information will be sent out to eligible residents in January of next year.

For those who are dual eligible, the long term care expenses that Medicare doesn’t cover are picked up by Medicaid. For those who only qualify for Medicare (and therefore will not be included in this new program), it’s important to remember that despite your age, Medicare does not cover all of your health care expenses. There are many different kinds of out of pocket expenses that Medicare will not pay for, including long term care, which can be extremely expensive. Read more details about the upcoming program here.

To learn more about the cost of long term care in Texas, click here.

Medicare Won’t Pay for Long Term Care

Most of us know someone who has needed long-term care services at one point or another. Whether it was a grandparent, friend, or simply an acquaintance, it isn’t hard to recognize that long-term care often has emotionally and financially devastating effects on families.

Too often, people assume that Medicare will pay for their long term care if something ever happens. When a real medical emergency arises, they find themselves scrambling to find a new plan after being told the truth: Medicare won’t pay for long-term care.

Preparing for the Cost

Americans are living longer and healthier lives, so more of us need care in our old age than in past generations, when life expectancy was much shorter and the standard of care was much lower. These days, people want and expect high-quality care, so creating a long-term care plan is essential to ensuring you receive the type of care you prefer.

The cost of long term care in Texas just about aligns with the national average, if not a bit lower, but it’s still far from affordable. In Texas, the median cost of a private room in a nursing home is more than $5,200 a month. Assisted living facilities in Texas are less expensive, but can still add up quickly, at a median monthly cost of more than $3,300.

Even just a few months of care in a facility can substantially reduce your retirement savings, which is why establishing a plan ahead of time is such a smart move.

Long Term Care Insurance Can Help 

Many people think that long term care won’t ever happen to them, but something as simple as a fall can lead to the need for long term care, even if just for a few weeks or months. Preparing a method to pay for any such care helps reduce the stress and confusion that arises from trying to coordinate delivery of services.

Long term care insurance has provided millions of Americans with protection from the high cost of care, helping them shield their assets and have peace of mind that they will receive high quality care.

Long term care insurance policies help pay for the cost of care in a nursing home, assisted living facility, or even at home if the policy allows it. Though some companies have raised rates lately to align with the increasing health care costs, the price of premiums is still extremely low when compared to the cost of care.

If you are in good health, you can get a substantial discount on your rates. There are several top-rated companies that insure Texans and have excellent reputations in terms of claim payments. Read more about long term care in Texas or request a quote today.

Looking at Long Term Care Insurance? Don’t Wait to Buy

Shopping for insurance isn’t something that should be rushed. Buying an insurance policy isn’t like buying a new shirt; it’s a process that requires a lot of serious thought and consideration.

Take Your Time, But Don’t Procrastinate

Because buying insurance is a matter that shouldn’t be taken lightly, we understand the importance of taking your time to think through all of your options before you decide. On the other hand, though, we have also found that there is a big difference between thinking through your options and putting off the decision. Many people tend to do the latter rather than follow through and buy a policy, which often ends up hurting them in the end.

Long Term Care Insurance can help you pay for the cost of long term care so you don’t have to cover the costs with the savings you have worked so hard for throughout your entire life. It provides you with a separate pool of money from the cost of care is deducted, should you ever file a claim. Qualifying for a policy requires more than just an application, though; it also requires good health and oftentimes, a young age. That’s why putting off the decision to buy a policy can be so risky.

Shelving the Idea

We frequently speak with clients who are shopping around for policies. After speaking with them, we send them a binder with a personalized quote comparison for them to look over. The point of the binder is to provide clients with all the information they need and allow them to review the various choices to decide which is best for them. Following a thorough review of the various policies is often the best time to buy. The information is fresh in your mind. All too often, though, we hear the age-old addage, “I’ll think about it.” Sometimes, we never hear from those clients again. Sometimes, we do.

When we do hear back from those clients, it is often one of two things. Either they just had an experience with a friend or family member that made them reconsider buying a policy and they are now ready to purchase, or they themselves have experienced a serious health problem that requires long term care and they are desperate to know if it is still possible to buy a policy. The answer? Probably not.

If you wait until you have fallen, suffered a stroke or heart attack, become fragile, or been diagnosed with a disease, the chances of qualifying for a Long Term Care Insurance policy are slim. Unfortunately, some people shelve the idea of buying a policy until one of those things happens and by then, it is too late. We actually spoke with a client recently who this happened to. Sadly, she didn’t wait long at all – just one week went by between when we sent her the binder and when she broke her hip. By the time she fell, there was nothing she could do. Her chances of qualifying for a policy were out the window because she was in her late 70s.

Buy at the Right Time

It may seem like the sensible thing to do: wait a little while to make a decision, and it might be. It also might be a mistake, though. Understanding your personal risk is vital to understanding when you should buy a policy. For most people, buying in their 50s is the best time because they are still in relatively good health and their age helps them attain lower premiums.

Regardless of how old you are, though, once you have decided that a Long Term Care Insurance policy is something for you, don’t wait to make the purchase. The longer you wait, the greater your chances are of missing out on your window of opportunity. To request a free quote, fill out this form. Thanks so much for reading our post today.