Long-Term Care; Be Prepared in an Area of Uncertain Options
February 17, 2011
It’s flu season again, and the strain going around this year has been a difficult one, mainly because of how long it keeps its victims out of commission. So the article we recently found on Time.com about Long-Term Care seems particularly timely and relevant, if only because this year’s flu could be seen as an omen of what’s to come as Baby Boomers age into their golden years.
According to the article, “A huge wave of baby boomers may need long-term care in their golden years — and yet fewer than half have taken steps to prepare for it… two-thirds of Americans believe it’s important to plan for long-term care, but only 44% have taken steps to protect themselves.” Part of the reason for this lack of preparedness is that Baby Boomers underestimate the likelihood that they’ll need long-term care, or they overestimate the likelihood that their children or families will be able (or willing) to provide that care.
But there’s another reason why Baby Boomers are statistically unprepared for the crisis of old age; to put it simply, there aren’t any clear avenues to solid and reliable financial preparedness. “While it’s clear that not enough people are thinking about preparing for their long-term-care needs, it’s not at all clear what, if any, the best solutions are.”
Some think that extra savings in the bank will cover the cost of long-term care; others believe that government programs such as Medi-Cal or Medicare will take care of them. Unfortunately, both of these beliefs are mistaken. “The average cost of a nursing home ranges from $85,000 to $120,000 a year, while hiring an aide to spend six hours a day on average in the home starts around $40,000 a year… Medicare, meanwhile, only covers up to 100 days of long-term care and often involves co-payments. Medicaid [Medi-Cal in California]will cover long-term nursing-home care but only after the person has drained his or her savings account.”
Another solution is long-term care insurance; but even with long-term care insurance, nothing is clear cut, and too many people have found themselves paying into a policy and ending up with no return on their investment. You also need to be healthy enough to qualify for the policy. Long-term care insurance is still one of the best options out there, but “There have been horror stories of people paying premiums on long-term-care insurance policies for years, only to find the benefits won’t cover their needs 20 or 30 years down the road when health care and long-term-care costs are significantly higher.”
Another option may be Medi-Cal for those who need nursing level care. Our firm has been a leader in assisting clients with qualification, and with helping them plan their estates to enable qualification when need later arises. There are many myths associated with Medi-Cal. For more information, we invite you to download a free copy of our “Consumer’s Guide To Medi-Cal Planning“.
The best advice we can give is to do your research and ask for the help of an advisor with experience in elder law, elder care, and senior financial planning. Be prepared.
Preparing Boomers for the Finance Sandwich Squeeze
November 15, 2010
Baby-boomers are called the sandwich generation—and with good reason. They were expecting to pay for their own retirement and their children’s college education; but now recession upon recession has toppled their elderly parents’ savings, and Boomers find that they are faced with the prospect of shouldering the financial burden of their parents’ final years as well. The pressure of providing for so many people at once can quickly become overwhelming, and using one’s own savings or retirement fund can begin to look like an easy solution to immediate financial concerns.
Although it may seem like an easy fix to looming financial debt, don’t give in to the temptation to use your own savings. Before you give in to fear and drain your retirement, get some professional financial advice. This special edition recently released in the New York Times shows that it is possible to prepare for what’s coming—both for your parents and yourself.
Our first recommendation is to discuss your situation with a trusted financial advisor. After that, one of the primary suggestions offered in the Times is to talk to your parents about their situation. It may not be easy; be prepared for your initial advances to be met with resistance. Aging parents often worry that they will lose control of their own finances, or that giving decision-making capacity to one child will lead to anger or hurt feelings among their other children. Instead of gearing up for a fight, the article mentions a few ways to gently lead into the conversation (including talking about family philanthropic projects.)
Another discussion you won’t want to skip is one about Long-Term Care Insurance. This article by Ron Leiber discusses different kinds of insurance, whether or not you’ll need it (you will), and how to pay for it.
The world of “old age” is changing. People are living longer than their predecessers and are experiencing more long-term health issues. In some situations, elders may be able to rely upon Medi-Cal to subsidize the cost of residence in a nursing facility, provided that appropriate planning is in place. However, care outside of the nursing home environment usually requires reliance upon savings and/or long term care insurance if available. For veterans, a tax-free Veterans Pension may be available, even if the disability is not related to military service. Serious discussion and serious planning are essential to surviving the challenges of the “new” old age.
How to Find the Best Long-Term Care Policy
October 30, 2010
As the average life-span increases—and the cost of medical care along with it—more and more people are beginning to see the need for long-term care insurance. Simply having a retirement plan isn’t enough anymore. Saving for retirement now means not only saving for your living expenses, it means preparing and saving for your health care expenses as well; expenses which will most likely include major medical procedures, eventual in-home care, and perhaps even long-term nursing care.
The idea of long-term care insurance is no longer a new and strange one, but it’s still not a concept most people feel completely comfortable with. What kind of long-term care insurance should you be looking at? Can you get coverage for your entire life? (Probably not.) What types of care and services will be covered? (Each policy will vary.) Can you get a policy that goes into effect right away, or is there a waiting period? (There is often a waiting period.)
Not all long-term care policies are created equal. The U.S. News and World Report recently published an article advising 7 things to look at when choosing a long-term care policy. Some of the things you’ll want to pay attention to include the benefit amount, the benefit period, which services are covered, and inflation protection, just to name a few.
Choosing a long-term care policy is an important step, and not one to be taken blindly. If you are confused about long-term care policies, or unsure of which one may be right for you, don’t hesitate to ask the advice of a professional. Insurance agents, financial advisors and estate planners may all be able to help answer your questions or point you in the right direction.
Will Long-Term Care Living Arrangements Prevent You from Leaving an Inheritance?
August 16, 2010
In our last post we wrote about what matters most when choosing a long-term care living situation, suggesting that it’s not always the place that matters most, but the mind-set of the elderly person who will be living there, and how involved that person is in the decision-making process. However, this does not mean that the quality of each living place doesn’t matter at all. In fact, according to the Wall Street Journal great care should still be taken when selecting a long-term care living situation… especially if you’re considering a Continuing Care Retirement Community (CCRC).
If you are considering a CCRC for yourself or an elderly loved one, you may want to read this article in the WSJ, which mentions that although more and more older Americans are drawn to the benefits offered by a Continuing Care Retirement Community, those benefits “often come at a steep price and ‘considerable risk.’”
The article goes on to mention that “So-called CCRCs—which typically offer fine dining, health clubs and on-site long-term care—have grown in popularity along with the aging of the population, particularly among the upper-middle class and affluent,” but that “the economic downturn is making it tougher for potential new residents to sell their existing homes and fill openings in new and expanded communities, which are generally regulated by state governments. As a result, low occupancy levels are challenging the industry’s financial models.”
We mention this because many of our clients are at a time in their lives when they or their elderly parents are looking into long-term care living situations, and we see how difficult it is to sort through all the choices and find a place that fits. Not only is quality of life an important factor (maybe the most important factor), but for many people the cost of the place they choose may mean the difference between leaving their children an inheritance and dying penniless.
We urge any of our readers who are in the market for long-term care living arrangements to look carefully at all their options; ask questions, do the research, and don’t be afraid to ask for help or a second opinion.
What Matters Most When Choosing a Long-Term Care Living Situation?
August 11, 2010
Elderly people and their families can spend months—sometimes years—looking for the perfect long-term care living arrangement. Most families try to avoid the nursing home option to the very end, believing that assisted living or small residential care homes provide a better quality of life. But is this fact or fiction?
Paula Span in her article on the NY Times New Old Age Blog suggests that “what variety of facility an older person lives in may matter less than we’ve assumed. And that the characteristics adult children look for when they begin the search aren’t necessarily what makes a difference to the people who move in.”
Span’s suggestion is based on (among other things) a recent study published in The Journal of Applied Gerontology, which found that among 150 Connecticut residents living in various long-term care situations (assisted living, nursing homes, residential care homes), the type of living situation itself made little difference in the resident’s emotional well-being. Rather, happiness and contentment was more a matter of “the characteristics of the specific environment they’re in, combined with their own personal characteristics — how healthy they feel they are, their age and marital status.”
Logically enough, a resident of a long-term care facility of any kind is more likely to report satisfaction and comfort if they had a hand in choosing their living situation, if they were part of the decision making process. In fact, it is the process itself—researching options, visiting facilities, considering current and future social and physical needs and how they will be met—that is the beginning of acclimatization.
Whatever your choice, you’ll want to know that you have options for paying for your long-term care living situation. Medicare.gov has published a chart summarizing and comparing the various options for long-term care financing. We find that the chart falls short, however, in the way it outlines the features of “Medicaid”, called Medi-Cal in California, as it does not address planning options that are currently available to qualify for the subsidy and protect your home and other assets. For more on this topic, see our “Consumer’s Guide to Medi-Cal Planning”.
Can You Really Afford Long-Term Care Insurance?
June 26, 2010
The American Association for Long-Term Care Insurance recently released a report on the costs of long-term care insurance, and the results were surprising. Most people mistakenly believe that long-term care insurance is going to be expensive and difficult; but in fact, according to the report, “over one-fourth [of buyers under the age of 61] paid less than $999-per-year.” And in fact, “fewer than one in 10 (9.3%) pay $3,500 or more.”
This is great news! This means that long-term care insurance could cost you less than $100 per month! The trick is that you have to think about it early. “Age at the time of application plays an important role in determining the cost for long-term care insurance the Association study reports. While 41.5 percent of buyers under age 61 pay between $500 and $1,499-per-year, only 20.8 percent of buyers who are ages 61-to-75 pay within this range.”
This is not to imply that if you’re over the age of 75 you’re out of luck. You’re not likely to get the same great rates as someone in their 50’s, but you still may not have to pay an arm and a leg for long-term care insurance. According to the report, of applicants aged 76 and older only 28.2% end up paying an annual premium of $4,000 a year or higher. Actually, almost half of applicants in this age range still end up paying less than $2,500 a year. This may not be the attractive $500/year you could have gotten in your 50’s, but it also isn’t the thousands of dollars a month most people seem to be afraid long-term care insurance is going to cost them. In fact, it’s only a little over $200/month.
If you’ve been thinking about long-term care insurance, don’t wait any longer. This is one situation where time is not on your side; the quicker you act the better it will be.
Protecting Your Parents, Protecting Yourself
May 10, 2010
Do you need long-term care insurance? You may think you’re too young to think about that quite yet, but what about your parents? If you’re reading this blog it’s likely that your parents are at an age where they soon may need some sort of care, whether that will be in-home care, nursing care, or even need to stay in a nursing facility; if your parents haven’t planned ahead for this eventuality, the burden for their care—either financial or physical or both—may fall on you.
It is for this very reason that a new trend in long-term care insurance seems to be emerging. According to this article by Stacy Schultz, there is an upswing in the purchase of long-term care insurance by the Boomer Generation—except the insurance isn’t for the Boomers themselves, it’s for their parents. “Many of them have just had a relative go through being in a nursing home, and they see the devastation and the stress it causes,” quotes the article. “They’re concerned about mom and dad, and if their parents don’t have a lot of means they want to buy insurance for them.”
If you are considering buying long-term care insurance, either for yourself or your parents, you have a number of options, especially compared to even just a few years ago. Forbes.com recently published an article outlining the improvements in long-term insurance, and what your options are if you’re buying it today.
Take an hour or two this month to talk to your parents (or your kids) and advisors about what the coming years have in store. You may not need long-term care insurance, but you will certainly need a plan, and it’s never a bad idea to know your options, especially when it comes to protecting your future. In the lives of many Boomers, protecting their own future also means protecting their parents’ futures.
A “Graying Trend” In Caregiving
April 28, 2010
What will you be doing when you’re 73? If you think you will have earned the right to have someone take care of you, think again; you may end up serving as a caregiver for someone else. A recent article in the New York Times describes a new trend in caregiving: the elderly are being cared for increasingly by the elderly. According to the article, “Professional caregivers — almost all of them women — are one of the fastest-growing segments of the American work force, and also one of the grayest.”
As odd as it may sound, the arrangement of 55-75 year olds caring for 85-100 year olds often works out beautifully. Older caregivers may not be able to do much heavy lifting, but what they are able to do is connect with their charges. Many older caregivers have already spent months or years caring for their parents or spouse, so they have an understanding of the fear, frustration and stress the families are going through. In addition, because older caregivers often share similar culture and experiences, the relationship can end up turning into a friendship, as with the case of Grace Jackson and Mary-Lou O’Neill:
“Grace Jackson, who is 101, said she never wanted a helper at home and resented Mary-Lou O’Neill, 73, when she arrived four years ago at Ms. Jackson’s daughters’ insistence. But as their relationship has grown, ‘It’s developed into a friendship,’ Ms. Jackson said, adding that friends who had younger aides were often offended by their manners or language.”
The down side to this “graying trend” in caregiving is that most of these elderly women—in spite of how they excel and make the best of their situation—become caregivers because they have to, they can’t afford to retire completely, even at the age of 70 or 75. The time to think about your own future is now. Talk to your advisors about planning for your own retirement; because although you may have everything it takes to be a wonderful caregiver in your senior years, the fact is that you may not want to.
Jinies.com