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Managing Healthcare Costs

What is Long-Term Care?

If you’re planning for retirement, you’ve probably heard about long-term care and the need to plan for it. It’s a common need for retirees. In fact, the U.S. Department of Health and Human Services estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care at some point in their lives.1 The average senior will need care for three years.

But what exactly is long-term care? How is it provided? And what kind of health issues cause a need for long-term care? Long-term care is a broad term that applies to a variety of services. It’s difficult to plan for something when you don’t know exactly what it will look like or how much it will cost.

Long-term care is generally defined as extended assistance with basic living activities, like mobility, bathing, eating, household chores and more. It can be provided in the home or in a facility. It’s often caused by cognitive issues like Alzheimer’s but can also be needed as a result of stroke, cancer, heart disease, joint issues and a wide range of other conditions.

You can’t predict what kind of health issues you’ll face in the future, but you can plan for potential costs. Below are three common ways in which long-term care is administered. A financial professional can help you develop a strategy to pay for your future care needs.

 

Family Support

 

For many seniors, long-term care is progressive. It often starts with support for simple tasks like meal preparation, cleaning or running errands. As health issues become more intense, they need more hands-on assistance with things like mobility or bathing.

You may be able to count on a family member or friend for help in the early stages of care. However, family-based care usually doesn’t last forever. At some point, your care needs may progress to a level that is beyond your family’s capability. For instance, you may reach a point where your spouse can no longer transfer you from a bed to a wheelchair. Or you may need round-the-clock support and that may be too much for your family to provide.

While these thoughts aren’t pleasant, they’re a reality for many seniors. According to projections, it’s likely that most seniors will need paid, professional care at some point. Even if your family is able to help, don’t count on that low-cost assistance to meet all your needs.

 

Home Care

 

Even if your needs have progressed beyond what your family can provide, that doesn’t necessarily mean you’ll have to move into a facility. You may be able to stay in your home and get the care you need, especially if you’ve developed a strategy to pay for care.

For example, you could modify your home to accommodate health equipment such as a bed, a wheelchair or even grab bars. You might be able to hire an in-home health aide to provide custodial care and possibly even skilled nursing.

Genworth estimates that a full-time in-home health aide costs an average of $4,195 per month.2 Most long-term care insurance policies cover home care, even if it’s provided by a family member. Many policies also cover home modifications and equipment.

Facility Care

 

The U.S. Department of Health and Human Services estimates that 35 percent of all seniors spend at least a year in a nursing or assisted living facility at some point.1 You may need skilled nursing as the result of a specific injury or illness. Or you may decide to move into an assisted living facility, so you have full-time support available.

Either way, your facility care is likely to be a costly proposition. Genworth estimates that the average room in an assisted living facility cost $4,000 per month in 2018. A room in a nursing home cost more than $7,000.2

It’s possible that these costs will be covered by Medicare or Medicaid, but that’s not usually the case. Medicare only covers skilled nursing that’s related to a specific hospitalization. Even if you qualify for Medicare, the coverage typically lasts only several months. Medicaid only covers nursing home care if you have few assets and little income. You may want to think about alternatives to Medicare, like long-term care insurance, to pay for your stay in a facility.

 

Do you have a strategy to pay for long-term care? If not, let’s talk about it. Contact us today at Retirement Peace Project. We can help you develop a plan. Let’s connect soon and start the conversation.

 

1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

2https://www.genworth.com/aging-and-you/finances/cost-of-care.html

 

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

18148 – 2018/10/17

3 Ways to Help Your Elderly Parent with Their Long-Term Care Need

It’s a situation every child fear, but one that is a painful reality for many families. A parent, after spending decades raising a family, building a career and maintaining a home, no longer has the physical or mental ability to care for themselves. They either need care and support in their home, or they need to transition into an assisted living facility.

According to the U.S. Department of Health and Human Services, 70 percent of Americans age 65 and older can expect to use long-term care at some point in their lives. On average, they will need care for three years, although 20 percent of retirees will need it for five years or more.1

If you’ve already started exploring your care options, you know how costly these services can be. In some cases, you may be looking at thousands of dollars per month for several years. If your parent doesn’t have significant assets or long-term care insurance, that could be a tough bill to pay.

At the same time, you may be preparing for retirement, or you could be newly retired. You might not have the resources or financial flexibility to shoulder some of the burden. While you may want to help your parent get the care they need, you also don’t want to sabotage your own plans.

Fortunately, you have options available. Below are three sources to explore as you plan your parent’s long-term care:

 

Government Assistance

 

There are a variety of government assistance programs you may want to look into. While Medicare is the most prominent, it often doesn’t cover long-term care costs. The exception is if the long-term care is a direct result of a hospitalization. In that case, Medicare may cover costs temporarily, but it usually isn’t a long-term solution.

Medicaid will cover long-term care almost as long as it is needed. The catch, though, is that your parent will have to be nearly destitute before they’re eligible. To qualify for long-term care, you must have a very low level of cash and few other assets.

Finally, if your parent is a veteran, they may qualify for a program known as Aid & Attendance (A&A) from the U.S. Department of Veterans Affairs (VA). The A&A program is designed to help housebound veterans with their care expenses.

The A&A benefit is paid monthly in addition to any existing military pension. The VA uses a complex formula to arrive at the A&A benefit amount, so you’ll want to consult with the agency for more information.

 

Non-Obvious Assets

 

If your parent needs long-term care, you’ll probably start your planning process by evaluating their bank accounts, pension plans, investment accounts and more. Those are all great resources to consider.

However, there may be other assets that are just as helpful. For example, your parent could have old permanent life insurance policies that have been accumulating cash value in the form of dividends or interest for years or even decades. You could tap into that cash value to pay for care.

Also, look at your parent’s physical assets. It may be difficult to part with a treasured car, art collection or even the family home, but if it gets your parent the care they need, it could be worth it. You could also consider a reverse mortgage to tap into the home’s equity without surrendering the house itself.

 

Family Care Agreements

 

If you have siblings, you may find that the most efficient way to provide your parent with care and support is to handle it within the family. This could be especially true if your parent needs help only with basic activities like cleaning, dressing and bathing, rather than with medical issues.

In some families there’s one sibling who may have the time, temperament and skills to provide such care. Of course, it also may not be fair for that sibling to shoulder the entire burden. In that case, you may wish to create a family care agreement. That’s a document by which the siblings who aren’t providing care contribute compensation to the sibling who is handling the day-to-day care and support.

While it may be uncomfortable for siblings to pay one another, that kind of arrangement could also make it more feasible for your parent to stay in their home and to get care from someone they know, love and trust. If you opt for this strategy, make sure you create a formal, legal document and spell out every detail.

 

Ready to develop a long-term care strategy for your parents and yourself? Let’s talk about it. Contact us today at Retirement Peace Project. We can help your family develop and implement a plan. Let’s connect soon and start the conversation.

 

1http://longtermcare.gov/the-basics/how-much-care-will-you-need/

 

3 Health Care Costs That Could Bust Your Retirement Budget

Planning on retiring soon? Do you have a projected retirement budget? If not, now may be the time to create one. It’s an important financial tool that can help you manage your spending and preserve your retirement assets. You can use your budget to plan for a wide range of expenses, such as housing, utilities, taxes, travel and more.

One major expense you don’t want to overlook is health care. Many retirees assume that Medicare covers all health care costs. The truth is there are many medical expenses that aren’t covered by Medicare. In fact, Fidelity estimates that the average retired couple will spend $275,000 on out-of-pocket medical expenses.1 That figure doesn’t even include the cost of long-term care.

If you don’t plan ahead, medical costs could bust your retirement budget. The good news is you can take action today by developing a strategy. Below are a few of the types of health care costs you may face. Use these to estimate your cost exposure and build your budget.

 

Premiums, Deductibles and Copays

Many people assume that Medicare is completely funded by Medicare taxes and that the program doesn’t have premiums. The truth is that only Part A, which covers hospitalizations, doesn’t have a premium. The other parts, however, do have monthly premiums. If you want coverage for things like doctor visits and prescription drugs, you will likely have a monthly health insurance premium.

Also, remember that all parts of Medicare have deductibles and copays. The amounts depend on your specific policy. The more robust your coverage, the higher your premiums are likely to be. You can reduce your premiums by changing your coverage, but doing so may increase your deductible and copay.

 

Service Not Covered by Medicare

Traditional Medicare doesn’t cover a wide range of services and treatments. Dental, vision and hearing services aren’t covered. The same is true of physical therapy and some types of mental health treatment. Even hospitalizations and skilled nursing care are only covered for short periods of time.

Medicare Advantage, also known as Part C, exists to fill these gaps. It’s an innovative program that allows retirees to purchase coverage from private insurers. These policies offer traditional Medicare coverage plus enhanced protection for additional services.

Of course, since Medicare Advantage is optional, it also comes with additional premiums. A wide range of Medicare Advantage policies are available, so it’s important to consider your specific needs, budget and objectives before you purchase a policy.

 

Long-Term Care

According to the U.S. Department of Health and Human Services, most retirees will need long-term care at some point in their lives. The agency estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care in the future.2

Long-term care is usually costly, whether it’s provided in a facility or in the home. According to Genworth, the average monthly cost for an assisted living facility in 2017 was $3,750. The average cost of an in-home health aide was more than $4,000.3 Many retirees need long-term care for many months or even several years, and the costs can add up to be a drain on retirement assets.

You may want to consider purchasing long-term care insurance to cover some of the cost. You pay premiums to an insurer, which then covers some or all of your long-term care expenses. Most policies cover care provided either in a facility or in the home. Some even provide a death benefit to loved ones in the event that you don’t need the long-term coverage.

The Retirement Peace Project is a “non-commercial” retirement education organization.  Classes are supported by local churches, employers and United Way chapters. Call us today (217) 498-7700 for a schedule of an upcoming Retirement Peace University in your area.

 

 

1https://www.fidelity.com/viewpoints/retirement/retiree-health-costs-rise

2https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

3https://www.genworth.com/about-us/industry-expertise/cost-of-care.html

 

17743 – 2018/6/19

Medicare Basics for New Retirees

Turning 65 soon? Age 65 is an important milestone. It’s generally considered to be “retirement age” by many employers, pension plans and other retirement benefit groups. Perhaps most important, it’s the age at which you can apply for Medicare coverage.

Medicare is an important resource for retirees. If you’re like many Americans, you’ve paid for Medicare your entire career. Medicare is partially funded through a payroll tax on all American workers. After you retire, you can use Medicare to pay for a wide range of health care costs, including hospitalizations and visits to your doctor.

While Medicare is an important retirement tool, it can be complex for those who aren’t familiar with the system. You’ll need to decide what type of coverage you want and when you want to enroll. These decisions are important because they impact your health care costs and your financial stability in retirement.

Below are a few common questions and answers about Medicare. If you haven’t yet reviewed your Medicare options, now may be the time to do so. A financial professional can help you determine which type of protection best aligns with your budget and your retirement objectives.

 

What are the different Medicare options?

Medicare offers several different types of coverage. They’re labeled as “parts,” and the specific parts included in your coverage determine which types of services and treatments are included in your Medicare protection.

Part A is the most commonly used form of protection. It covers hospitalizations. It’s also automatic, which means you are enrolled by default at the time you file for Social Security benefits. Part A has no premiums and is funded by the payroll tax you have paid during your career.

Part B is another auto-enroll form of coverage, but you can opt out of it if you wish. Part B covers doctor visits. It does come with a premium payment, so if you’re still working at age 65 or have coverage through a spouse’s plan, you may wish to opt out of Part B.

Part C is a unique type of coverage that is sometimes referred to as Medicare Advantage. It allows you to buy your Medicare coverage through a private insurer. You pay a premium for the coverage, but you may receive protection for services not typically included in traditional Medicare, such as dental visits or long-term rehabilitation. Part C plans have a wide range of premiums depending on your specific coverage, deductibles, copays and more.

Part D is a relatively new type of protection. It offers coverage for prescription drugs and is available to anyone who’s enrolled in any of the other types of Medicare. Part D is a voluntary coverage program, and you will have to pay an additional premium for the protection.

 

When should I enroll in Medicare?

You are eligible to sign up for Medicare at age 65. You can enroll through the Social Security website or by calling Social Security. If you file for Social Security benefits, you will automatically be enrolled in parts A and B, though you have the ability to opt out of Part B if you wish.

Medicare offers an annual enrollment period in which you can change your coverage. You can add Part B if you previously declined it, or you can switch to a Medicare Advantage plan that may offer additional coverage.

It’s wise to evaluate your coverage every year and determine whether it’s right for your needs. You may find that you want a plan with lower premiums, or you may determine that you’re willing to pay additional premiums for coverage for prescription drugs or other services. The annual enrollment period is your time to make those adjustments.

 

Are Medicare and Medicaid different?

Medicare is often confused with the other government health care plan, Medicaid. Medicare is a health care program primarily for retirees, although those with long-term disabilities may also be eligible.

Medicaid is a program that’s offered by individual states to those who cannot afford health care. You are generally only eligible for Medicaid if you have little income and few or no assets. Many seniors use Medicaid at the end of their lives when they have depleted other resources. However, much of your health care in retirement will be funded by Medicare.

Ready to plan your health care strategy in retirement? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.

 

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

17510 – 2018/3/26

Have You Planned for These Health Care Costs in Retirement?

Planning on retiring soon? Do you have a projected retirement budget? If not, now may be the time to create one. It’s an important financial tool that can help you manage your spending and preserve your retirement assets. You can use your budget to plan for a wide range of expenses, such as housing, utilities, taxes, travel and more.

One major expense you don’t want to overlook is health care. Many retirees assume that Medicare covers all health care costs. The truth is there are many medical expenses that aren’t covered by Medicare. In fact, Fidelity estimates that the average retired couple will spend $275,000 on out-of-pocket medical expenses.1 That figure doesn’t even include the cost of long-term care.

If you don’t plan ahead, medical costs could bust your retirement budget. The good news is you can take action today by developing a strategy. Below are a few of the types of health care costs you may face. Use these to estimate your cost exposure and build your budget.

 

Premiums, Deductibles and Copays

Many people assume that Medicare is completely funded by Medicare taxes and that the program doesn’t have premiums. The truth is that only Part A, which covers hospitalizations, doesn’t have a premium. The other parts, however, do have monthly premiums. If you want coverage for things like doctor visits and prescription drugs, you will likely have a monthly health insurance premium.

Also, remember that all parts of Medicare have deductibles and copays. The amounts depend on your specific policy. The more robust your coverage, the higher your premiums are likely to be. You can reduce your premiums by changing your coverage, but doing so may increase your deductible and copay.

 

Service Not Covered by Medicare

Traditional Medicare doesn’t cover a wide range of services and treatments. Dental, vision and hearing services aren’t covered. The same is true of physical therapy and some types of mental health treatment. Even hospitalizations and skilled nursing care are only covered for short periods of time.

Medicare Advantage, also known as Part C, exists to fill these gaps. It’s an innovative program that allows retirees to purchase coverage from private insurers. These policies offer traditional Medicare coverage plus enhanced protection for additional services.

wide range of Medicare Advantage policies are available, so it’s important to consider your specific needs, budget and objectives before you purchase a policy.

 

Long-Term Care

According to the U.S. Department of Health and Human Services, most retirees will need long-term care at some point in their lives. The agency estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care in the future.2

Long-term care is usually costly, whether it’s provided in a facility or in the home. According to Genworth, the average monthly cost for an assisted living facility in 2017 was $3,750. The average cost of an in-home health aide was more than $4,000.3 Many retirees need long-term care for many months or even several years, and the costs can add up to be a drain on retirement assets.

You may want to consider purchasing long-term care insurance to cover some of the cost. You pay premiums to an insurer, which then covers some or all of your long-term care expenses. Most policies cover care provided either in a facility or in the home. Some even provide a death benefit to loved ones in the event that you don’t need the long-term coverage.

Ready to develop your health care funding strategy? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.

 

1https://www.fidelity.com/viewpoints/retirement/retiree-health-costs-rise

2https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

3https://www.genworth.com/about-us/industry-expertise/cost-of-care.html

 

 

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

17508 – 2018/3/26