Tackling Long-Term Care Needs—November is Long-Term care Awareness month.

Tackling Long-Term Care Needs—November is Long-Term care Awareness month.

November 15, 2023

It can be hard to think about and bring up to family members in conversation, but long-term care is an important need to prepare for as a part of your overall financial plan.

How much care could you need? On average, women will need 3.7 years of care, and men will need an average of 2.2 years. (Original source: Horsesmouth)

Approximately half of people turning age 65 will require some kind of paid long-term care in their lifetimes.

While planning is crucial to ensure you and your loved ones are prepared for the unexpected, many people are not sure what is even covered by insurance, and others are often misinformed about what is covered by Medicare. 

Let’s look at six steps to help guide you in making—and begin planning for—your possible long-term care needs.

  1. Gauge the likelihood of needing care.
  2. Review potential costs.
  3. Assess available resources.
  4. Create a long-term care fund.
  5. If insurance is the answer, investigate whether a stand-alone or hybrid policy makes sense.
  6. If government-funded care is part of the solution, think through the ramifications.

Medicare and most health insurance plans, including Medicare Supplement Insurance (a Medigap policy), do not pay for long-term care.

What does Medicare cover?

  • Medicare covers up to 100 days of nursing home care. For many, that may not be enough.
  • Medicare can help with costs for skilled home health or other skilled in-home services. What is skilled home health? It is a wide range of health care services that can be provided in your home for an illness or injury. These might include monitoring a severe injury or illness, injections, patient and caregiver education, and nutrition therapy. The goal is to help you recover, regain independence, become more self-sufficient, or slow any decline in health.
  • Generally speaking, long-term care services by Medicare are provided for a short period of time.

What about Medicaid? Medicaid is available to those who meet strict income and asset guidelines. Unlike Medicare, which is health insurance, Medicaid is public assistance.

Medicaid will count wages, Social Security benefits, pension, veteran benefits, bank and investment accounts, trusts and annuities, and your property.

In most states, Medicaid looks at your income over the last five years.

Medicaid eligibility occurs on a rolling basis. You could make just $1 over the monthly income limit and end up on the hook for the cost.

Developing financial strategies

Which option is best will depend on various factors, including age, health status, the likelihood of needing care, and your financial situation.

Some people use their own assets to pay for care. Be advised you may have tax consequences for drawing on an IRA, 401k, or qualified plan. 

Discuss this with your tax advisor.

A reverse mortgage, long-term care insurance, hybrid life insurance policies, and annuities can provide much-needed flexibility.

Final thoughts

How you should approach long-term care will depend on your circumstances. We have offered a basic outline of various options. If you have additional questions or concerns, please reach out to us.

It’s not something that is set in stone. Life events can create the need for adjustments, but the plan is your blueprint for financial success.

Thank you for trusting us as your financial advisors.