Long Term Care — An Important Piece of Your Retirement Puzzle
Many people are puzzled when they begin to plan for their retirement. Where do they start? There are so many things to consider, and frankly, no one can predict the future. So just how does one begin to figure out the big question:
Q. How do I keep from running out of money in my retirement?
A. A good retirement strategy has many pieces, including Social Security, income, investments, assets and more. But there’s much to learn, and the best way to do so is with a guide — someone who can go over your unique, personal situation. Because, when it comes to retirement, there is no “one size fits all” solution. And you deserve to speak with someone who’s not just trying to sell you a product. You deserve to work with someone who’s going to be your guide and partner, someone who will work with your current CPA or financial advisor as part of a team.
But first, as promised, let’s talk about long term care. Let’s go over some of the questions you may have.
Q. What is the average life expectancy?
A. Here in Marin, we know how to enjoy life, and we live well. We take care of ourselves, eat good food, stay active, and enjoy nature. And it pays off. The average life expectancy for a Marin resident is 83.7 years, while for the rest of the nation, it is 78.6 (Source: A Portrait of Marin 2012).
Q. What do nursing homes cost in Marin?
A. Our cost of living in Marin is a little higher, and this is reflected in the cost of nursing homes — around $100K/year! Think about how long your current savings would last if you had to cover that cost. Most people are shocked by this fact.
Q. How likely am I to ever need nursing home care?
A. Here’s where I’d like you to expand your thinking a bit, because we’re talking about much more than nursing home care. A policy under the State Long Term Care Partnership Program covers in-home care, as well. Wouldn’t you much rather stay in your own home, if possible, rather than be in a nursing home? Of course you would; most people want to maintain their current quality of life. And in-home care is about half the cost of nursing home care.
But back to the question: How likely are you to need it? The reality is, 70% of the people who buy long term care insurance end up using it — more than almost any other type of insurance.
Why? Well, for one reason, because we’re living longer. What used to kill us even 10 years ago, doesn’t today. But, unfortunately, that often means we live our final years with disability — temporarily or permanently.
Q. What do people do who don’t have long term care insurance?
A. Unfortunately, they do nothing. Often, they don’t want to be helped — they don’t want to be a burden — so they don’t take care of their medical issues. They go through their assets rather quickly. They hasten their departure to the nursing home because their disability hampers their independence — all because they didn’t have a plan of care. And once they’re disabled, it’s the worst time to try to put together a plan of care, because they’re not at their best. It’s hard to figure out what to do when you don’t feel well and your money’s running out.
People who have a plan of care are able to moderate their disabilities. They’re able to have a better quality of life and avoid unnecessary suffering.
Q. How sick or disabled does someone have to be to be eligible for this plan to pay out?
A. The biggest misperception people have is they believe one has to be helpless before they can take advantage of their policy. But that’s just not the case.
Here’s what usually happens: someone has surgery and would rather recuperate in their own home. Or they have a moderate disability, such as rheumatoid arthritis. Or they injure their hip or their back. Even though they only need partial assistance, the policy pays.
Q. What are the determining factors?
A. It comes down to this: does your condition keep you from doing “activities of daily living” (ADL)? These activities include: dressing bathing, eating, walking, going to the bathroom… If you have trouble with these, and your doctor agrees the condition will continue for more than three months, you’re eligible for coverage.
Q. How can the coverage be used?
A. The best thing about these policies is that you are in control. You determine who you want to assist you. And they also cover modifications to your home.
For example: let’s say you’re in the hospital with a broken hip. By the time you leave the hospital and go home, most of the modifications to your home have already been done (ex: ramp, grab bars, shower seats, etc.). You get someone to do your cooking and laundry. You get a therapist in the house with durable medical equipment. And, importantly, you get a monitoring system. You have a comprehensive plan of care.
And if somebody isn’t working out — you can get someone else. They’re held accountable for your satisfaction.
Q. How big a policy do I need?
A. Think of it as your bank of days. A good benchmark is around two years. More is better, but two is a good place to start.
Q. What riders make sense?
A. There are two riders that I consider essential. One is an Inflation Rider. You want to make sure your policy coverage increases with inflation so it doesn’t go out of date.
And the other is a Zero Day Elimination rider. This is important for people considering in-home care. Without it, most policies would make you wait 90 days before the policy picks up — you can go through a lot of your assets in 90 days. With this rider, your coverage starts immediately.
Q. Doesn’t the government cover some of this cost? Can’t I get Medicare or MediCal to pay for some of this?
A. Medicare would only cover facility care. MediCal would cover you, but you’d have to spend down your assets first to qualify. With a Partnership Policy, your assets are protected against MediCal spend down. Which means, not only does the policy pay, it makes you more eligible for MediCal (which supplements the policy).
Does this make sense to you so far?
Do you have more questions?
Are you ready for a personalized presentation comparing your best options among three well-known, well-respected carriers?
If so, please pick up the phone and give me a call.
About the State Long Term Care Partnership Program
The State Long Term Care Partnership Program is a federal-state policy initiative to encourage individuals to purchase private insurance to cover long term care services.
The Long Term Care Partnership Program was initiated after a successful pilot project funded by the Robert Wood Johnson Foundation in 1980. Four states participated in the pilot (California, Connecticut, Indiana, and New York).
Only specially certified representatives can offer these policies.