Long-Term Care: Making Preparations for the Future

Most Americans aren’t prepared when it comes to long-term health care. Whether it’s the care of a loved one or your own, long-term care is something we should all be prepping for. In previous generations, elderly parents and grandparents could count on moving in with relatives when they were no longer able to live alone. However, today’s ever-changing family dynamics means many Americans are reluctant to burden their families with caregiving duties.

Long-term care encompasses services needed to support someone who is elderly, chronically ill, disabled, or unable to care for themselves for a long period of time. Most long-term care is focused on helping people with daily activities like dressing, bathing, cooking, and using the bathroom. The associated costs are quite alarming as well. One study projected that healthy 65-year-old couples could expect to spend $260,000 on healthcare in their remaining years.

Though we cannot fully cover a topic as complex as long-term care in a single post, here are several questions to help you start assessing your future needs.

What are the costs of long-term care?

Most Americans can rely on Medicare for many routine medical issues and hospital procedures after age 65. However, there are limits to what Medicare covers. For example, Medicare does not cover personal care at home (unless you are receiving nursing care), services to help you stay at home, long-term nursing home care or custodial care. With Medicaid usually kicking in only after you deplete your life savings, you’ll likely need to pay out of pocket for any home-based, nursing home, or assisted living care.

Keep in mind that the cost of care varies dramatically by state and city. For example, the annual cost of a semi-private room in a Florida nursing home had a median price of $87,600 in 2015. The exact same room in Alabama, $69,715. Do some research to find out what the costs are in your area to develop a better estimate of your future needs.

What financial resources do you have?

Depending on your personal financial situation, there are a number of options available as you prepare for future long-term care expenses. For example, if you are wealthy, you may be able to self-insure. Therefore covering long-term care costs without threatening your (or your spouse’s) lifestyle.

If you are a disciplined saver, perhaps you are setting aside extra money each year to eventually cover your future healthcare needs is a great game plan for you. Long-term Care insurance is also an option that could make financial sense. One of the main reasons couples purchase long-term care policies is to protect a healthy spouse. If the other requires expensive care or needs to go to a nursing home, they’re covered.

Bottom line: Healthcare is expensive and complex. Planning your long-term needs will depend on your personal situation. Long-term care insurance policies contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. We strongly recommend working with a professional to help you evaluate your options and determine the best strategy for you and your family.

What’s your personal and family health history?

No matter how much you plan, there’s no way to know whether you’ll need long-term care until you actually do. However, your current health and lifestyle can give you some clues to the type of care you may need later in life. Examining how your parents, grandparents, and other relatives fared later in life gives you insight into what might happen on your own. Since your age and health history affect the cost of long-term care insurance premiums, it’s essential to start thinking about your needs as soon as possible.

How can an advisor help?

With Americans living longer, healthcare is now an increasingly important matter. Long-term care issues are very complicated. Don’t navigate long-term care issues alone. Speak with a financial advisor for help. Preparing for future needs could allow you to remain independent as long as possible, and reduce the risk of outliving your nest egg.