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How Am I Going to Pay for Long Term Care?

Until you need it, most people still do not realize that, in the State of Georgia, Medicare, Medicaid nor Health insurance contribute anything to the cost of long term care. This often comes as a huge shock to seniors and their families when the time comes that it is desperately needed.

The next logical thought is, well if Medicare, Medicaid nor Health Insurance pay for assisted living, I guess we’ll just have to let Mom (or Dad) stay for long term care in a nursing home where Medicare/Medicaid or insurance will pay for it.

Woops! Wrong again!   Neither Medicare, Medicaid, nor Health Insurance contributes to long term care in a nursing home if there is no medical need for 24-hour medical care by a nurse or doctor. This means that housing with 24-hour oversight and management of things such as nutrition, medications, and fall prevention are, in essence, preventative and life-maintenance, not health care. The annual cost if you paid for this out of pocket in a nursing home is in the range of $75,000 per year in the Atlanta metro area.

So, the next consideration is getting someone to “come in” and see to your loved ones needs. That is a great idea! A qualified licensed agency with a Certified Nurses Assistant who has the training for the job will cost you from $12 to $22 per hour. For 8 hours a day, typical cost will be between $750 and $880 per week ($39, 000 to $45,760 per year) and then Mom (or Dad) will be completely alone for the other 18-hours a day unless you are prepared to move in yourself.

Okay, so here is the next idea and it’s a good one. Move them into your home. That is a great solution IF. There are certain things to consider when this idea surfaces. If your loved one is not managing well in their own home, how are they going to manage in yours? What about stairs and other physical barriers such as bathroom design, accessibility to the garage or carport, and the width of your doorways? Who is going to be helping with bathing, toileting, meals, laundry, housekeeping, medication management, dressing, grooming, and ambulation? If they don’t need all of these things now, how soon will they? Keep in mind that there are also other things such as socialization, recreation, medical appointments, and adjusting the lives of everyone living in the household to meet the needs of one new resident that moves at a different pace and has completely different needs and expectations of a daily schedule.

The latest estimates are that this sort of household merge doesn’t get much practical mileage and typically lasts only 10 to16 months, with most members of the household reporting less than satisfactory results with the arrangement. Typical measurable cost is in the neighborhood of $20,000 per year above things such as medical care and personal needs.

One of the hidden costs of this sort of arrangement is in the long range reduction in household income. It is quite common to see an adult child give up or cut back on their own earning potential to provide care to a parent. In doing so, there is lost income, lost opportunity, and a reduction in savings for their own retirement which then becomes a generational deficit with the caregiver unable to bare the cost of their own long-term care when the time comes.

After considering the alternatives, Assisted Living now becomes a more logical choice and a financially viable alternative for frail seniors who do not need full time skilled medical care. With an annual cost ranging from $22,000 to $60,000 per year, there are many great assisted living formats with a wide array of style and amenity choices offering great advantages over the previous options.

Few want to give any thought to these issues until faced with the reality that is frequently the result of a crisis. When families come to us seeking advice, here are some of the basic funding options we can discuss.

  • Cash is King- Save, Save, Save!
  • Long Term Care Insurance- best financial tool for long term care. Good insurance products in this category are becoming more accessible. Most of the people we presently see in long term care did not have good options and therefore, did not purchase this vehicle for taking care of their late life care needs while it was affordable to them. If you can afford the premiums, carefully read the policy to make sure that it will cover all contingencies and care settings so that you have choices. Usually best purchased before age 65.
  • Investments that can be liquidated or borrowed against for long term care.- This can include your primary residence, investment property that produces monthly income, Certificates of Deposit, 401K’s, I.R.A.’s, Life Insurance Policies, Stocks & Bonds, and other high and low risk investments.
  • Periodic payments from a 3rd Party- This includes such things as Pensions, Annuities, Social Security payments, Trusts, and Reverse Mortgages. The amount of risk is largely dependent upon the source of the payment. Annuities and Reverse Mortgages typically have a very high cost that reduces the value of the principle so they are not generally recommended as a tool in planning for long term care.
  • Veteran’s Benefits- There are benefits to help with the cost of long term care from the Veteran’s Administration. For qualified veterans (service-related injury or disability is not required) and/or their surviving spouses, the benefit can be quite significant when combined with social security and a pension or other periodic payments. There are numerous hurdles to cross for the typical veteran so be sure to get expert assistance in determining if you should apply for this pension. There are a lot of people in the marketplace that claim to be experts. If they want you to move your existing assets to a product they represent, a financial planner they recommend, into an annuity, or into another investment, run-don’t- walk to a representative of your local Georgia Veteran’s Service Office (this is a State of Georgia program). Where this may not be the fastest or easiest route, it is better than getting scammed. Going to the V.A. directly is not usually the best option because it is such a small part of their programming, there seems to be few staff members who are well-schooled in the intricacies of the benefit.
  • Life Insurance Policies- Many older adults have been taught to believe that life insurance is the best way to provide for those they love upon their passing. Most of us however, don’t really want our parents’ money, we want them to have a high quality of life in their final years. If you cash in a life insurance policy with the issuing company, you are likely to get pennies on the dollar in return after years of paying into the policy. There are now companies that have come into the marketplace offering 2-5 times more through what is known as a “Life Settlement”. This may not be the right vehicle for everyone but for some, it is one of a number of tools to assure that your loved one can and will get the care they need.

Come in or call us to schedule an appointment to discuss your needs and how we may be able to help you. Whether you are just in the planning stages or looking to fill an immediate need, our Certified Gerontologist will be happy to meet with you and suggest ways to meet your goals and budget. A FREE consultation is just a phone call away! 770-431-7055

This is not intended to be financial advice. It is solely to inform our readers about some of the many financial options that can be used to make assisted living and other long term care available for those who need it.

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