Will you or someone you love need care in an assisted living facility or nursing home? The facts say that 35 percent of those aged 65 and older will eventually need this sort of long-term care and even greater percentage will need some sort of home health service care. When you factor in the rate of people younger than 65 who will need some sort of long-term care (37 percent), you realize it’s essential to plan for this possibility. When Medicare isn’t there to help with assisted living, here’s what you should start thinking about.
Medicare won’t cover the costs of a nursing home?
That’s correct. For many this is a strange thing to hear, as they rely on Medicare for a large majority of their health care needs. Medicare Part A will sometimes cover shorter-term stays in skilled nursing facilities when it’s absolutely medically necessary, but for the most part, Medicare does not cover long-term stays in nursing homes or assisted living facilities. This what many insurance companies define as Custodial Care. This means that a large majority of those who need long-term care pay for it out of pocket. A special note for those living in California: Medi-Cal covers nursing care for low income patients and is accepted by 90 percent of providers in the state. However, there are many requirements to qualify and most people who do are not home owners and make less than $1500.00 a month. Learn more about Medicare and Medicaid downloading the “Medicare and You Brochure“
When Medi-Cal isn’t an option, how do you make those pockets deeper?
Cash out your life insurance
If you need a good amount of cash to pay for a long-term care facility one option is to cash out your life insurance policy in a process known as a life settlement. While policies vary, most life insurance policies worth over $50,000 that are whole, convertible term, or universal should be able to be settled for cash. Many life settlements end with payouts higher than the cash-out value, but lower than the full policy amount.
Historically, reverse mortgages are a great way for retirees to generate incomes from their existing property – usually for the purposes of retirement funding – while still retaining title on their home. But reverse mortgages are being used in more interesting ways these days. At its core, a reverse mortgage is simply allowing a lender to begin to purchase equity in your property. They make payments to you, as opposed to the other way around. This can free up income for the purpose of paying for long-term care. Of course, like any major financial decision, taking out a reverse mortgage comes with pros and cons, so do your research.
Long-term care insurance
While Medicare doesn’t support long-term care, there is specific insurance you can acquire to help. If you have a risk factor of needing long-term care (illness, disability, cognitive disease, etc.), purchasing this insurance may be your best bet. Make sure you understand the differences in long-term care policies, as some may cover nursing home stays, in-home care, or both. If you want more info on the types of policies offered by providers in your own state, check here
If you have a declining medical condition, disability, or can otherwise foresee needing long-term care, you can begin to make moves to save for it. Many people pay for long-term care directly out of their savings, and this can work if you plan properly. One such option is to open up a health savings account, which allows you to contribute $3,500-plus to a tax-deductible account every year. If you start early, you can save enough to pay for long-term care.
The fact is that you or someone close to you will need some sort of assisted living care at some point in life. Don’t make the mistake of believing your insurance – whether public or private – will pay for it. It usually won’t. Be smart and plan ahead. There are plenty of ways to increase your funds for this common life expense.
Article written by Hazel Bridges