TUESDAY, JUNE 5, 2012
Many individuals put off decisions about long-term care as long as possible. They assume that they will die before long term care is required, or they simply choose to negate long term care and stay at home. The truth is most people don’t have a choice of whether or not they’ll use long term care; they only have a choice of how they’ll pay for it. This is where procrastination becomes a bigger enemy than you thought. Procrastinating long term care planning is like throwing money out the window as you drive down the highway.
Planning ahead to determine funding for long term care is an investment well worth the time. Here are six common ways an individual can pay for the long term care that will inevitably be required:
Public programs
Public programs such as Medicare and Medicaid can help pay for some long term care expenses, but will not cover ongoing care or chronic conditions. Medicaid is only available to those with very low incomes and meeting the requirements is based on personal financials. To qualify for Medicaid means you must spend down your assets to virtually nothing, and Medicare doesn’t cover enough to be a worthwhile option. A second funding option will be required to cover what Medicare won’t.
Private or family support
Some family members leave it up to their children to fund their care costs. While this might be a viable option for those with generous, willing, and financially successful children, this is not generally a path taken lightly. While family or loved ones may want to help, consider the implications, burdens, financials, and geographic circumstances that may have a significant impact. In 2012, the annual median cost of care in Kentucky for a semi-private room in a Nursing home was $69,003. And private rooms could cost as much as $75,555, that’s just for one year. Some older parents may deem it the responsibility of their children to care for them, but if the children don’t share that opinion, they can simply refuse to cover the costs.
Other forms of insurance
Other forms of insurance may cover some of the costs associated with long term care. Disability insurance generally replaces lost income for basic rent, food and clothing, but not all disability plans will cover all circumstances requiring long term care, so it’s important to understand where your disability insurance coverage ends.
Health insurance will cover the hospitals, prescription, and doctors but not nursing homes, home health nurses or other long term care services. Health insurance will generally cover similar items to Medicare, which is general health needs, not long term care needs.
Self-funding
For those who have been successful with decades worth of savings, they may have the accumulated wealth to pay for any long term care needs. But it’s a risk when a person believes they have saved “enough” only to outlive their expectations, or be surprised by a chronic condition needing additional care they weren’t planning for. In addition, using your life savings for long term care leaves no inheritance options for loved ones.
Reverse mortgage
Some may choose to pay for long term care with a reverse mortgage. Reverse mortgages allow the homeowner to draw on the equity of the home and the loan is deferred until they move out or die. Becaue reverse mortgages are nonrecourse loans the seller never owes more than the value of the house even if the home sells for less than the amount of the reverse mortgage. The amount you can qualify for depends on the value of the house and the age of the owner, but the older the owner the more they usually qualify for.
This is only a good option if you plan to stay in your home. If you have to sell the house to move into a nursing home the loan amount will be due.
Long-term care insurance
Long-term care insurance is designed to cover the costs of long term care. The entire reason for long-term care insurance is to provide an opportunity for those who need it to receive the care they need and have options of choosing the methods and providers. Long term care insurance is the best way to have a guaranteed funding plan for long term care which will adequately provide for the future, regardless of what it holds.
By Matt Reynolds - Google+
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