During the past four years, I’ve watched two elderly relatives navigate their final years in vastly different ways.
One spent three years at an assisted living facility of her choice, and when she died, she left a nice inheritance for her surviving family members. The other is still alive, has wiped out virtually all her savings and is expected to die practically penniless.
Both these relatives worked hard, lived modestly and retired with healthy savings. Neither had costly medical bills, and their age is only two years apart. So what made the difference in their circumstances? One had long-term care insurance and the other did not.
The reality is that you can do everything right when it comes to your money and then watch all your plans crumble in the final years if you haven’t protected yourself against long-term care costs. Here’s what you need to know:
Medicare isn’t going to help
If you move into an assisted living facility, you could pay as much as $80,000 a year for a one-bedroom unit, according to GoldenCare. Even the cheap states have annual costs of $36,000 or more.
People think Medicare will cover this cost, but it won’t. It might pay for a short-term stay in a nursing home after a hospitalization if you need continuing medical care, but even then, you’re on your own after 100 days.
Unless you have a long-term care insurance policy you’re going to be footing the bill yourself. Once you’ve wiped out all your assets, you can then apply for Medicaid, but that’s not an ideal option either.
Medicaid may not let you stay where you want
Medicaid programs vary by state, but they almost never provide the same flexibility as long-term care insurance. They only pay for participating nursing homes, and your preferred facility might not have a Medicaid contract.
What’s more, while states may have waiver programs that pay for home health care or adult foster care, income restrictions are often quite low, making it difficult to be accepted. If you can’t get a waiver, in-home care or an assisted living facility may no longer be an option for you.
If you are relying on Medicaid, you’ll have to spend down all your assets to as little as $2,000, although there are a few exceptions. For instance, your house may be an exempt asset. Then, you may have to hand over virtually all your Social Security and pension income to the state before they will cover the remainder of the monthly nursing home bill.
It’s a shame so many people end up on Medicaid when long-term care insurance coverage can be affordable if purchased early.
A great option for a long-term care insurance policy is LTC Financial Solutions. We also recommend checking out this top 10 list of long-term care insurance companies.
Not all long-term care insurance policies are the same
When you are ready to purchase your long-term care insurance policy, look for companies that are highly rated and offer flexible policy terms. LTC Financial Solutions, for instance, gets a rating of 4.7 out of 5 stars from ConsumerAdvocate.org. The company has been around since 2003 and has a proven track record.
Similarly, GoldenCare scores 4..6 out of 5 stars on ConsumerAffairs and has an A+ rating from the Better Business Bureau.
As you shop for the right policy, look beyond price to the following factors:
- What types of care are covered
- Maximum daily benefit
- Whether benefits adjust with inflation
- Length of waiting period before benefits start
- Available riders such as return of premium or waiver of premium
To get started and avoid becoming the relative in your family who dies penniless, visit LTC Financial Solutions for more information.
Note: GoldenCare does not operate in Alaska, Florida, Hawaii and Washington.
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