PLANNING AHEAD FOR AGING IS NOTHING TO TURN YOUR BACK ON
By: Darren Olivio, CRPC® & Christopher Fuller, CFP®
It is unfortunate that thousands of elderly Louisiana residents could be evicted from Nursing homes. More than 37,000 Medicaid recipients in Louisiana — many of them elderly and disabled —face losing their benefits on July 1 because of a $ 648 million state budget shortfall. This week the state’s Department of Health will send out letters to tens of thousands of elderly and disabled residents to warn them that they could soon lose their Medicaid benefits because of deep health care budget cuts. Although the Medicaid cuts still need to be approved by the Louisiana State Senate and the federal government, if approved up to 19,000 people who live in nursing homes and 2,700 people with developmental disabilities will be forced to find other places to live.
Don’t let this happen to you!
The phrase “long-term care” refers to aiding people with chronic illnesses, disabilities or other conditions on a daily basis over an extended period of time. This assistance can range from helping with simple activities (such as bathing, dressing and eating) to receiving skilled care that’s provided by nurses, therapists or other professionals.
According to a recent survey, most Americans incorrectly think that the current Medicare program pays for long-term care. Medicare will cover a short stay in a nursing home, or a limited amount of at-home care, but only under very strict conditions. Medicare does cover specific types of care such as care in a long-term care hospital, skilled nursing facility, some home health services and hospice care. Employer-based health coverage will not pay for daily, extended care services either. To help cover potential long-term care expenses, many people consider buying long-term care insurance.
WHAT IS LONG TERM CARE INSURANCE?
Long term care (LTC) insurance is designed to help you cover the costs of a nursing home or other skilled care as you age. As with most insurance policies, you must consider purchasing it before you need it, as policies become either unavailable or prohibitively expensive once it becomes clear that you need the protection. This type of insurance generally provides financial help for those who need specialized care on a daily basis and with rare exception, there is a good chance you will need some type of skilled care beyond rehabilitation and what Medicare or your health insurance will cover.
LTC insurance will cover the expense of the following:
- Nursing home: A facility that provides a full range of skilled health care, rehabilitation care, personal care and daily activities in a 24/7 setting. Find out whether the policy covers more than room-and-board.
- Assisted living: A residence with apartment-style units that makes personal care and other individualized services (such as meal delivery) available when needed.
- Adult day care services: A program outside the home that provides health, social and other support services in a supervised setting for adults who need some degree of help during the day.
- Home care: An agency or individual who performs services, such as bathing, grooming and help with chores and housework.
- Home modification:Adaptations, such as installing ramps or grab bars to make your home safer and more accessible.
- Care coordination:Services provided by a trained or licensed professional who assists with determining needs, locating services and arranging for care. The policy may also cover the monitoring of care providers.
- Future service options:If a new type of long-term care service is developed after you purchase the insurance, some policies have the flexibility to cover the new services. The “future service” option may be available if the policy contains specific language about alternative options.
If your health forces you to make a permanent move to a nursing home, your major assets (like your house, car, or even any savings you may have) must be utilized to help cover the cost of care, before Medicaid will step in to cover your remaining long-term care costs. It is also important to note that not all nursing home facilities accept Medicaid.
PLAN NOW AND SAVE
If you want insurance, start looking in your 50s or early 60s, before premiums rise sharply or worsening health rules out robust coverage. Every year you delay, the premiums will increase. For example, initial premiums at age 65, may be 8 to 10 percent higher than those for new customers who are 64.
LTC insurance premiums will vary based on your age, health, and the insurance company’s specific underwriting factors. Your premium will also depend on your personal choices, like the maximum daily benefit level, the length of stay your policy would cover, and any waiting periods before the coverage starts. If you are like 67% of Americans and you are relying on Medicare to pay for your long-term care, consider what is happening in Louisiana as your wake- up call.
CONFUSED, WE CAN HELP!
Despite government initiatives to raise awareness of the risks and costs of LTC, most people have taken no steps to plan and provide for their future needs. Why not? There are perhaps three reasons, first, denial – most people simply do not acknowledge their risk of needing LTC or the potential costs they face. The second is lack of knowledge, many individuals have misconceptions about the cost of care and how they can meet these future financing needs. And finally, there are those who are informed about their LTC options and have considered some of them but have not yet taken action. In some cases, the complexity of products and the array of choices may keep potential buyers from reaching a decision. Many people assume, before they find out any details, that they simply cannot afford any of the advanced planning choices. This leaves most people without any type of LTC risk protection. If you are one of the 57% of Americans that do not have a plan for LTC, book an appointment with us today. At Financial Consulting Group, Inc, we want to be your resource. Our experienced financial advisors take pride in our ability to help our clients simplify and improve their financial lives.
If you have questions about LTC insurance, we will be happy to explain what is covered and what is not. The most important thing is that you have a plan. There is no time like today to plan for tomorrow.
Darren Olivio & Christopher Fuller are Financial Planners and Wealth Managers who help Pre-Retirees, Post- Retirees, Business Owners, & Physicians ensure they have a well-defined financial plan that is nimble enough to change as the client’s needs change throughout their lives.
They believe the Financial Plan is the cornerstone of a trusted relationship that fosters a solid financial future. With over seventeen years of experience helping clients with retirement planning, wealth management, income planning and legacy planning and more than 200 wealth management relationships they have the experience necessary to help meet his client’s complex needs.
Sources: The survey referenced in this article was conducted by The Associated Press-NORC Center for Public Affairs Research with funding from The SCAN Foundation.
Long Term Care Insurance or Asset based Long Term Care Insurance Products may not be suitable for all investors. Surrender charges may apply for early withdrawals and, if made prior to age 59 ½, may be subject to a 10% federal tax penalty in addition to any gains being taxed as ordinary income. Please consult with a licensed financial professional when considering your insurance options. These policies have exclusions and/or limitations. The cost and availability of LTC insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of LTC insurance. Guarantees are based on the claims paying ability of the issuing company.