You can financially prepare for your future health and long-term care needs in retirement, even if you don’t know what health issues will affect you, by understanding who pays for care.
According to Forbes nearly 70% of people over the age of 65 will experience a life-altering health event requiring some kind of long-term care. Therefore the more you understand the better prepared you’ll be in the event you need it.
Who Pays for Long-Term Care?
Medicare
Medicare is a federal program that provides medical and hospital benefits for those 65 years and older. It has multiple components (A,B,C) that cover qualifying expenses related to physician visits, hospital stays, skilled nursing stays and prescriptions.
However there is no long-term care component with Medicare.
Long-term care services are often referred to as “custodial care.” Custodial care is when a person requires help with personal care tasks performed everyday. You may also hear these referred to as ‘activities of daily living.’
Activities of Daily Living include:
- Eating
- Bathing
- Dressing
- Toileting – ability to get on and off the toilet and perform personal hygiene
- Transfers – ability to get in and out of a bed or chair
Medicaid
Medicaid is a state and federal public assistance program to finance health care services for low-income individuals. Coverage requires a qualifying income level that will be determined by the state in which you live.
There is a ‘look back period’ of five years for all Medicaid applicants. This financial review determines if a transfer of assets took place that could have provided for medical care. If so, this may affect the date your benefits begin.
Not all long-term care facilities (nursing homes) accept Medicaid as payment for services. Furthermore many have a specific number of Medicaid beds that they can fill, which can lead to difficulty when searching for an available bed.
Long-term Care Insurance
Long-Term Care Insurance covers care that is not associated with health insurance, Medicare, or Medicaid. Those who are insured get reimbursed a daily amount for home care services, assisted living, and nursing care per their specific plan.
According to Washington’s Top News, there are many reasons to consider long-term care insurance (LTCI) such as having peace of mind or to avoid potential spikes in tax brackets. Long-term care expenses can cause individuals to use their retirement accounts and deplete savings quickly in order to pay for needed care. Because of this preserving savings is at the forefront of many peoples minds when considering an LTCI policy.
Personal Savings
Nearly 70% of people over the age of 65 will experience a life-altering health event requiring some kind of long-term care that will not be paid for by Medicare, which means personal savings will be required to pay for care.
Morningstar reports that an estimate of $217,820 will be needed for end-of-life care costs in a patient’s final five years and this estimation is only for those without dementia. For individuals with dementia, the estimate of care for one’s final five years is $341,651.
In 2017, Genworth created a long-term care comparison tool comparing care costs across the United States as well as projecting future care costs. Here’s an example:
2022 Projected Daily Care Costs – Cincinnati
| Care Environment | Type of Care | 2018 Daily Rate | 2022 Daily Rate |
| Facility | Assisted Living | $164 | $185 |
| Semi-Private Room Long term care | $248 | $279 | |
| Private Room Long Term Care | $270 | $304 | |
| In Home | Home Health Aide | $125 | $141 |
| Adult Day Care | $72 | $81 | |
| Homemaker Services | $125 | $141 |
* The home health daily rate assumes 8 hours of care.
These estimates are rising each year, with a 5 year increase of 15.9% in cost. Consequently personal savings can vanish quickly.
Continuing Care at Home Membership Programs
Newly emerging membership programs such as Confident Living in Cincinnati and Friends Life Care in Philadelphia and Delaware, protect your savings while offering health services so that you can remain independent at home as you age.
This option provides an alternative to long-term care insurance and includes 24/7 care coordination to help you manage your medical care and procedures.
Care coordinators also act as a concierge for personal needs such as home maintenance and repair referrals. Therefore removing the burden of care management from family members.
These programs offer customizable membership plans, you pay an annual fee based on the care and service options you want to receive at home. Some people joining these membership programs have long-term care insurance as well, further protecting their savings.
Confident Living is a continuing care at home program, focused on helping you remain active and independent as you age in your own home. We serve the greater Cincinnati area. For more information, contact us online or call (513) 719-3522.
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