Protecting Your Assets as You Grow Wiser

Have you heard the news? More of us are getting older. I know, we ladies do not like to discuss our age, but the fact remains that we are living longer.

Women reaching age 65 in 2010 are expected to live, on average, an additional 19.2 years compared to 16.6 years for men. (2006 OASDI Trustee Report, National Center for Health Statistics (2006).

What Is Long Term Care?
The longer we live, the greater the odds are that we will need long-term care. For individuals over age 25, the lifetime risk of needing long-term care is 1-in-4.

Beyond age 50, the risk jumps to 1-in-2. (Fact and Trends: The Nursing Facility Sourcebook, American Health Association (2001) Long-term care is care provided to individuals who, because of a physical or cognitive impairment, need assistance with the basic activities of daily living (ADLs), such as bathing, continence, dressing, eating, transferring and toileting.

Long-term care can be provided at home, adult day care centers, continuing or life care communities, assisted living facilities or nursing homes.

How Much Does Long-Term Care Cost?
The average annual cost of care in a semi-private room in a nursing home in the Chicago metropolitan area is $56,005.60 ($153.44 per day). The average annual rate in a one-bedroom, assisted living facility is $41,907.48 ($3592.29 per month).

The average hourly rate for a home health care aide is $28.56. On average, the cost of care in a nursing home increases almost
5 percent, annually. (2007 Cost of Care Survey, Genworth Financial (2007).

Who Pays for Long-Term Care?
Many people, ages 45 and older, mistakenly believe that Medicare or a Medigap supplemental insurance policy will pay for extended home nursing care. (Donald Marron, acting director, Congressional Budget Office, July 13, 2006) Generally, Medicare and Medigap supplemental insurance will pay for skilled or rehabilitative care.

It will not pay for custodial care (ADLs). Medicaid, which was created to assist individuals with little or no assets, will pay for custodial care. However, to be eligible for Medicaid, you can have assets worth no more than $2,000. The other option is to either pay for your care, out-of-pocket, or purchase long-term care insurance (LTCi).

Who Should Purchase Long-Term Care Insurance?
The United States Health Council recommends purchasing LTCi if you: 1) have assets in excess of $75,000 ; 2) have an annual retirement income of at least $30,000 for a couple and $25,000 for an individual; 3) are able to make the premium payments without having to make lifestyle changes; and 4) can absorb possible premium increases without financial difficulty.

What Are the Benefits of LTCi?
Long-term care insurance:

  • Provides for your care as you age beyond 65.
  • Offers a variety of care options to fit your budget and lifestyle.
  • Protects your personal assets and retirement savings.
  • Allows you to have more control over your long-term care and gives you peace of mind.

What Determines the Amount of LTCi Premiums?
The following factors impact the amount of your LTCi premiums:

  • Age and health (the healthier you are, the lower your rate).
  • Length of the benefit period, e.g., 2-6 years, 10 years or lifetime (the average nursing home stay is 2.5 years; this average is higher for patients with Alzheimer’s disease).
  • daily benefit amount.
  • elimination period (how long you will pay for care before insurance kicks in).
  • inflation protection (increases your benefit over time).
  • whether you receive home and community-based care or a spousal discount.

Make sure that you purchase LTCi from a reputable and financially stable company. You want a company that will be around if you need to file a claim. See a financial services professional to learn how long-term care insurance can benefit you.

About the Author

Marla V. Brady is a fully licensed financial advisor with strong business background, analytical and problem resolution skills that ensures achievement of team and individual goals. Versatile, results-oriented leader and developer of people, processes and relationships with expertise in human resources, consulting and compliance.  Specialties: Financial Planning, Deferred Compensation, Structured Settlements.

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