Cost of Long Term Care

MOO-CostofCare

A lot of people incorrectly assume that health insurance and Medicare will cover long term care. They cover medically necessary care for up to 100 days, or until you stop improving or stablize. After that, you’re on your own.

The majority of Americans over 60 do not have long term care insurance yet 70% will need care. So, why do people not buy insurance?

Most will say the cost of the policy. An average policy, depending on age, health and benefits chosen, will cost $1,000-$3,000 per year per person.

But what about the fact that the same people who say they will “self-insure” for long term care will never “self-insure” a parking meter… they always put money in the meter, even though they could easily afford and “self-insure” the parking fine.

We make decisions based mostly on emotion. That’s what causes people to buy stocks when they are high and sell when it crashes, the opposite of what seasoned investors do.

What if you “self-insure” for long term care, how much will it cost you? The national average for nursing home care is $89,000/year with some areas over $140,000/year. Home care and assisted living average $50,000/year. See how much care cost in your state: download the Cost of Care brochure.

For every $1,000 of monthly retirement income you want to generate from your own savings, you will need about $230,000 in assets, according to the Schwab Center for Investment Research. For example, if you want only $3,000 a month, or $36,000 a year, you would need savings of $690,000. That’s a conservative estimate, assuming that you earn 5.2% on your investments and live off the earnings without dipping into the principal.

If you cannot afford a long term care insurance policy, how are you going to afford paying out of pocket? The other option is spending all your cash for your care. This includes anything of cash value: savings, investments like stocks, bonds, life insurance, annuities. Medicaid allows you can keep only $2,000.

There are 30 states with filial laws that allow the state to make your children repay Medicaid for your care expenses, although this is rarely done. Fifteen years ago the #1 reason people bought long term care insurance was they did not want to be a burden on their family. Today, the #1 reason is people do not want to outlive their money (and end up on Medicaid-Welfare Health Care).

Some people will buy long term care insurance for asset protection. Most states have a Partnership program that will protect assets from Medicaid if you own a Partnership long term care insurance policy.

You have five options to pay for long term care:

1. Self-insure.

2. Long term care insurance and Partnership.

3. Life insurance with long term care rider.

4. Annuity with long term care rider.

5. Medicaid.

The life insurance and annuity do not qualify for the Partnership (neither do group LTC policies). The life/LTC or annuity/LTC are often bought because: the person’s health will not qualify for traditional LTC insurance, or the person has too many cash assets and they’d never spend down to qualify for Medicaid. An old life policy or old annuity can be converted to one with long term care benefits without paying capital gains.

You can continue down the same road, uninsured, until either a diagnosis or a serious change of health, like a stroke, will disqualify you from insuring. Then you will only qualify for state assistance. At that point you would have to have used, sold or given away your assets 5 years before applying for Medicaid. Who has the ability to see 5 years into the future?

*  The best age to insure: the age your health will still insure you.
*  The best benefits to get: enough to cover what you cannot afford to pay out of pocket.


For updated quotes and more information visit: https://guidetolongtermcare.com


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Medicaid cuts may cause nursing home closures

A proposed 25 percent cut in Medicaid rates would close 93 percent of nursing homes in Oklahoma, according to the Oklahoma Association of Health Care Providers (OAHCP). The proposed cut may eliminate 16,900 jobs and force 16,800 patients to move. Many of the state’s doctors could be forced to drop out of the Medicaid program because of inadequate reimbursement where they would be operating at a loss. Cutting Medicaid payments will also affect pharmacies, dentists, medical equipment companies, and home health services.

The legislature decides how much funding will go to the Oklahoma Health Care Authority. Patients, staff and families are writing letters to members of the state legislature, encouraging them to balance the budget without making these cuts. Oklahoma has a $1.3 billion budget shortfall

According to the Oklahoma Association of Health Care Providers, there will be some closures even without the rate cut. The nursing home industry is underfunded, and some facilities already lose money on Medicaid recipients. Part of the problem, too, is the number of people on the state’s Medicaid rolls. Most states cut off enrollment for people who make 133 percent above the poverty line. Because Oklahoma accepted federal stimulus money in 2010, the state must allow enrollment in Medicaid up to about 185 percent above the poverty line.

At the end of 2015, nearly 72 million people nationally were on Medicaid. Medicaid expansion is covered by the federal government, but states will pay an increasing percentage of the cost over the next few years.

The average daily rate for nursing home care ranges from $94 to $550 a day. This chart shows the costs by state.

Funding options include long term care insurance, self-insuring, life insurance or annuities with a long term care rider, and Medicaid. This chart shows a comparison of benefits.

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Most states have a long term care insurance Medicaid asset protection program. Find out more about Partnership here. Why Partnership? Read this: Son Hit With Aging Parent’s $93K Nursing Home Bill

 

 

 

 


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