What you should know when a loved one needs long-term care
Published 8:00 am Tuesday, March 21, 2023
This will no doubt surprise you: Seventy percent of people 65 and older will need some kind of long-term care eventually, and the cost of long-term care just keeps going up. The problem is that most Americans – 66% – believe that the government will cover most or all of those costs. Here’s the truth, and it’s not good news – with few exceptions, long-term or custodial care is not a healthcare benefit. Medicare DOES NOT cover nursing home care except for limited stays for rehabilitation after a hospital admission of three or more days.
If you’re placed in a skilled nursing facility for rehabilitation after a 3-day hospitalization, the costs of the first 20 days of services are covered in full by Medicare, while days 21 through 100 require a copay. After 100 days, you pay for all costs. Also, be aware that Medicare DOES NOT pay for in-home care.
Americans are living longer, and most of us are not financially prepared to deal with the astounding costs of various types of care and care programs. For instance, in the U.S. a private room in a nursing home has a median cost to consumers of more than $8,000 per month, or about $100,000 per year, according to a report from Genworth, which provides national median figures. A semi-private room in N.C. is less expensive, but still carries a hefty price tag: $85,775 per year. Even in assisted living facilities, a small one-bedroom in NC can cost you $43,000 to $50,000 a year. (Median price figures were calculated by Genworth from surveys filled out by more than 15,000 long-term care providers including almost 4,000 nursing homes and 6,300 assisted living facilities nationwide.)
These are challenging times for many people, especially our seniors. In America today, 63% of the adult population and 72% of Americans earning less than $50,000 per year are living paycheck to paycheck. That doesn’t bode well for too many people as they reach their senior years. So what can some of us do if life throws us a curve ball?
There are ways to pay for long-term care, but they don’t work for everyone, and some have serious drawbacks that you may need to consider. These include purchasing long-term care insurance, but to be even reasonably affordable, you should do it when you’re in your fifties or early sixties, and you must be in reasonably good health to be accepted and receive an affordable premium rate.
There are other things you can do:
- If it’s early in your career, start a Health Saving Account to plan for unexpected, and very large expenses in your retirement years.
- Apply for a Reverse Mortgage to take money from your home’s value, especially if you have a lot of equity in the home or no longer have a mortgage. But be aware that this can be costly with higher interest rates than a traditional mortgage and can have very complex terms.
- Downsize to a smaller home or an apartment to use the gains from the sale of your home to pay for the person requiring full-time custodial care.
- Apply for a home equity loan that taps the current equity in your home. Be aware, mortgage payments on that loan often begin immediately and missing a payment could result in foreclosure and losing your home.
Ron Kauffman is a Consultant & Expert Speaker on Issues of Aging. You may contact him by phone at (828) 696-9799 or by email at: firstname.lastname@example.org