Healthcare for the Long Haul
Health costs are likely to increase each year you blow out the candles on your birthday cake. Make sure you and your family can celebrate your longevity with ease by planning for your future needs.
Who Needs It?
Advances in medicine have allowed people to live longer than ever. While that’s in some ways a good thing, it means many seniors may join the ranks of those requiring long-term care (LTC) in later years. Some statistics:
- Nine million Americans needed long-term care in 2012; care for Baby Boomers could inflate that number to 12 million in 2020.
- Seventy percent of those 65+ will require some period of long-term care. For example, a stroke or surgery may result in the need for help with activities of daily living, or ADLs (bathing, dressing and the like).
- A home healthcare aide averages $19 per hour in the U.S. That adds up to $39,520 a year for a 40-hour week. Round-the-clock care is triple that, or $118,560.
- Costs for a nursing home in America’s heartland add up to about $60,000 a year; big-city facilities often charge upwards of $160,000 a year. Yes, you read that right.
People in their 50s and 60s who are still paying off a mortgage and perhaps their kids’ college tuition and loans may see LTC insurance as just another financial burden. But waiting to enroll in a plan may be more expensive in the long run:
- The average annual premium for LTC is based on current age. Therefore, people at the younger ages will pay less for their coverage.
- If you put off choosing an LTC plan, the onset of various medical conditions may disqualify you from coverage at any price.
- Alzheimer’s and dementia affect 5 million Americans over 65. Without an LTC policy in place, the stress of daily care for an elderly parent usually falls on family members.
- Medicare provides limited coverage, typically up to 100 days with some form of co-insurance. And Medicaid requires you to pay down your assets to about $2,000 before it takes on your LTC bills, leaving almost nothing for you or your heirs.
Depending on the benefits you seek, today’s policies can be tailored to your budget. Your financial advisor can also help you weigh potential financial risks and the effects on your assets in retirement. Consider these incentives, too:
- New York State residents get a 20% tax credit when they buy an LTC policy.
- Certain tax advantages apply to business owners who buy LTC policies for themselves or their employees.
- Some insurance companies offer couples a lower rate when both sign up for a policy. Inflation riders, shared benefit plans and the way in which benefit coverage periods are determined can all help to keep down costs over time.
Don’t wait to have the Big Talk with your parents, your spouse or even yourself! With possible cuts in entitlement programs on the horizon, make sure that you and your loved ones are cared for at every stage of life.