Purchasing a long term care insurance policy can be a daunting experience. It’s the biggest expense our nation’s aging population faces, especially as the cost of care continues to rise each year. There are many challenges that come with the cost of care as expenses related to long term care rise.
Your family might not have a budget or a plan in place for your aging relatives care, but now according to Genworth’s 2013 Cost of Care survey, the national median cost of care for a nursing home is $83,950 annually, making it even more important for people to understand how they will pay for these costs. Your relatives long term care should be factored into how your family plans to take care for your mother and father, and your own future care needs.
In order to help educate the community on the importance of actively budgeting and planning ahead for long term care needs, whether that involves buying a long term care insurance policy or not, here’s some expert advice to help get you started on budgeting for long term care needs.
- become educated on the costs
- choose an option that best suits your lifestyle
- build a team
- get started
- put it in writing
- underestimate the need
- rely on medicare or medicaid
- try to do it alone
At least 70% of Americans over the age of 65 will require long term care services at some point during their lifetime (LongTermCare.gov). The more you know about the cost and impact of long term care choices, the more apparent it is that you need to start planning today. Health care and long term care costs continue to rise and being prepared for not only yourself, but also for your loved ones, will allow you to plan accordingly. Long term care insurance is a necessity to avoid high costs later in life and to ensure you are protected. Check out the Genworth Interactive Cost of Care Map as a resource; it allows you to compare current costs for long term care and project what it will be in 15 years.
The caregiving and long term care service industry is evolving to fit the lifestyle needs of today’s elderly. Depending on your plan of care, there are several options available: in-home care, adult day care, nursing home facilities, assisted living, etc. Knowing what best suits your lifestyle and the costs associated with it ensures you can select a long term care policy that meets your needs. Your policy should provide care wherever you are most comfortable and ease the financial and emotional strain on family members.
Choose a trusted long term care planning partner; both a financial planning expert and a family member. You need someone who can help you purchase a policy and build and budget a holistic plan. It’s never too soon to talk about your personal needs, what fear and anxieties you have, as well as your thoughts and wishes on long term care. Creating a list with your partners and discussing it in at least three meetings will allow you to normalize the difficult emotions many of us feel around long term care events. Understanding your goals and values allows you to evaluate what you need financially to live comfortably and which long term care policy best suits you.
Budgeting for long term care costs can be daunting, especially as the costs continue to rise each year. Find a financial professional to work with that can provide you with information on options for long term care insurance and make recommendations to help you manage current expenses/finances that will impact how much you can save for the long term. Planning today for what you need tomorrow is the only way to get ahead and be prepared for the unexpected costs.
Beyond purchasing the policy and identifying where the money is coming from, the plan needs to be put in writing, tangible, and get you closer to your long term care wishes. Save money, budget and develop financial disciplines that can be applied to your everyday living. The final plan should include a hardcopy and an electronic version that lists your team, their roles, and their contact information.
It’s never too early to purchase a long term care policy; I did so with my husband at 42 in order to ensure we wouldn’t be a financial or physical burden to our family. On average, consumers purchase policies between ages 55 and 64, but why wait when your good health can help reduce the cost of insurance and you can get discounts that you won’t lose if your health changes (American Association for Long-Term Care Insurance)? Beyond the cost savings, long term care is not about being old; an event could happen at the drop of a hat and where would you financially turn if you needed care?
Now more than ever, it’s important to know your options and have a long term plan for financial security. This is especially important for women who face a unique situation when it comes to long term care as they are typically hit twice: first as the primary caregiver and second as the care receiver. Women typically overlook the need for insurance, and yet are a good example of why it’s important to purchase a policy early in life.
In general, many people incorrectly assume that government programs pay for long term care needs. While Medicare can provide very limited in-home services for short-term durations based on a variety of factors, long term care is generally not covered. From homemaker services and transportation to adult day care and round-the-clock nursing care, we all have four main payment options for these high expense services: our own savings, our family’s pocketbooks and savings, long term care insurance and Medicaid (for those who qualify).
Working with a financial planner provides you the education you need to purchase a long term care insurance plan and understand the options, coverage and costs. The sooner you are able to get started on a plan and budget your expenses, the more prepared you may be for when and if a long term care event should occur.
Following this suggested advice should give you a good idea of what the costs are and which long term care option works best for your particular situation. Every person has different needs, but it is important to understand those needs, communicate with family members, create an actionable plan, and work with a financial professional to meet your goals.