Long-term care is an important consideration when it comes to financial planning for seniors. According to data from the Urban Institute, 70% of Americans over the age of 65 will need some form of long-term care. Today 14 million people are receiving long-term care, but that number is expected to double by 2050.
This data means that it’s likely that you’ll be facing similar decisions about your care in the future. It can seem a little scary, but you don’t have to make these plans alone. At Caring Places Management, we can help you learn more about options for long-term care financing and how that can impact a senior’s finance and retirement planning.
What Type of Long-Term Care Will You Need?
“Long-term care” is an umbrella term covering a wide variety of circumstances and situations. For some, long-term care can be as simple as in-home medical treatments, while others require the kind of round-the-clock treatment you find in a residential facility.
Without a crystal ball to see the future, you’ll have to plan for the eventuality. According to Genworth, a private insurance company, the average cost of a private nursing home in 2019 was $102,000 per year. Should you one day require this level of care, you’ll need a strategy to help with managing finances.
Options for Long-Term Care Financing For Seniors
As much as we’d prefer to put off these considerations, it’s crucial to plan today for tomorrow’s decisions. Here are the best long-term care financing options:
Long-Term Care Insurance
Long-term care insurance is one of the most direct ways to prepare for a senior’s financial and health needs. This insurance policy is designed to cover the financial needs associated with long-term care, either through regular home-based treatment or admission to a nursing facility.
If you choose this option, you’ll want to do so sooner than later. Applicants over the age of 70 or 80 may have trouble qualifying for this policy, and even when you do, you may find yourself faced with high monthly premiums.
Life Insurance
Life insurance policies are generally designed to pay a beneficiary after your death. But many policies include additional riders that provide at least a portion of your funds during your lifetime. For instance, the “accelerated death benefits rider” will give you an advance on your death benefit if you are diagnosed with a terminal illness.
The good news is that a life insurance policy may be able to provide you with funds to cover your health care, and you can typically use these funds to cover other bills (groceries, housing, credit card debt, etc.) to reduce the burdens caused by your illness.
The bad news is that access to these funds is limited only to certain qualifying conditions or illnesses. Seniors should check carefully with their insurance provider before relying on a rider to finance their long-term care.
Public Programs
Thankfully, seniors can often receive public assistance to cover their long-term needs. Medicaid is a federal and state program that can assist seniors who eventually require some form of long-term medical assistance.
While Medicaid provides a solid safety net, it doesn’t offer much in the way of financial independence or personal agency. Seniors who default to public programs may find their options limited regarding the location or quality of their care.
Home Equity Conversion
You’ve probably already seen a few commercials for something called a “reverse mortgage,” the more common term for a home equity conversion (HEC). This program allows you to remain in your home but receive monthly payments based on the accumulated equity in your home.
HECs are a valuable part of financial planning for seniors and help them retain financial independence even in their golden years. While it’s true that some seniors have been taken advantage of by unethical lenders, today’s reverse mortgages are federally regulated to protect seniors. This gives homeowners access to cash when they need it, which they can use for any end-of-life expenses they see fit.
Discuss Your Plans with Your Family
Does your family know your wishes for the future? Your end-of-life decisions may be numerous, which is why it’s important to discuss your final wishes with your family. Your concrete financial plans might even need to be put in writing, so a trusted family member can implement them if you should ever be incapacitated. Appointing someone to serve as power of attorney will ensure that your wishes can be carried out to the letter.
Finding the Right Long-Term Care Solution
It’s essential to find a long-term care solution that not only meets your senior’s finance plans but personal needs, as well. None of these decisions should be made lightly.
Caring Places Management understands the importance of finances for seniors and accepts insurance so that our residents get the care they need without shattering their savings.
Contact us today for more details on how our programs and services can help you or your family.
