Building a retirement strategy is about living the way you want to live. Including long term care as part of that strategy can help protect your assets, help maintain your financial freedom, and provide you with options in choosing quality long term care services. Consider the impact needing long term care would have and review your options.
A long term care planning discussion with your family and financial professional is a key part of any retirement strategy session. Why? Because long term care can impact your family, as well as your retirement savings or business productivity, and paying for that care can be a challenge. From insurance and public programs, private family support, self funding or even a combination of these, there are many options to consider as part of your retirement strategy.
Long term care insurance covers a variety of service models. It is designed to help reimburse the cost of skilled or custodial long term care whether that be at home or in a facility.
Although long term care insurance can be expensive, plan design and product feature flexibility enable this coverage to be available to meet most budgets. A financial professional can help guide you through selecting a solution that best meets your needs. Long term care insurance covers a variety of service models. It is designed to help reimburse the cost of skilled or custodial long term care whether that be at home or in a facility.
Many states participate in the Long Term Care Insurance Partnership Program (“Partnership Program”). The Partnership Program is designed to encourage individuals to plan for their long term care needs by allowing them to retain more assets than would otherwise be allowed under state Medicaid eligibility requirements. As a result, policyholders are able to retain assets they would otherwise have to spend down prior to qualifying for Medicaid benefits. Generally, individuals can participate in their state’s Partnership Program by owning a long term care insurance policy that meets the requirements for the Partnership Program. Policies qualifying under the Partnership Program generally do not cost more than non-qualified policies with similar benefits.
Another idea is for you to assume the primary financial risk for the cost of long term care by allocating a portion of your savings for this need. In considering self-funding, think about potentially needing care in your older years. This strategy includes a review of the cost of care in your area, which should consider inflation and living expenses for you and your family. This can be the information baseline for the savings you will need to set aside for long term care.
Medicaid (referred to as Medi-Cal in California) generally pays for certain health services and nursing home care for those with low incomes and limited resources. Medicaid may also pay for some long term care services at home and in the community. Medicaid has limitations on the amount of assets you may own and the amount of income you may receive each month before you are eligible for benefits. Who is eligible and what services are covered vary from state to state. There also are restrictions on transferring assets to others in order to qualify for Medicaid.
Generally, Medicare is the federal program that provides hospital and medical insurance to people age 65 or older and to certain ill or disabled persons. Benefits may be available for home health care, but only if certain conditions are met.
Medicare may pay for up to 100 days of care in a skilled nursing facility per benefit period — 100 percent for the first 20 days (after a three-day hospital stay, provided skilled care is needed). Then, for days 21-100, Medicare requires a co-payment. To help cover the co-payment, many seniors also have a Medicare supplement insurance policy. In general, once Medicare stops paying for care, the supplement payment also will end.