While most baby boomers in their 60s are healthy, many Americans will have health issues when they reach their 70s. With sicknesses like cancer and Alzheimer's disease striking later in life, most Americans will require long-term care at some point. Motley Fool's recent article, "5 Long-Term Care Myths Debunked," looks at some common myths about long-term care to help you better prepare for that eventuality.
No. 1: I won't need long-term care. Yes, you probably will. Because life-altering conditions typically happen later in life, many people in their 60s underestimate the likelihood that they might need a long-term care health insurance policy. The U.S. Department of Health and Human Services says that 70% of people turning 65 this year will require long-term care in the future.
No. 2: Insurance will cover long-term care. Private insurance and Medicare may cover skilled nursing, short-term care, and medically necessary care, but they won't cover custodial or personal care services. These types of services make up a big chunk of long-term care expenses. While a Medigap plan will pick up many of the costs for services that aren't covered by Medicare, it also does not cover long-term care costs. Private insurance and Medicare won't pay for assisted living, continuing care in retirement communities, or adult day services. The costs of the care they will cover are frequently limited to specific situations and to a short period of time. Medicaid will cover long-term care, but qualifying can be challenging for many retirees and guidelines for eligibility vary in each state.
No. 3: My savings will cover my long-term care. Not likely. The average person enters retirement with a median $131,000 in retirement savings. That's not enough to pay for long-term care with the average assisted living facility costing more than $43,000 a year and the average nursing home costs running more than $82,000 per year for a semi-private room.
No. 4: Medicaid can't touch my home. Not necessarily. If you qualify for Medicaid and it pays for long-term care, federal law mandates that states recoup the money spent by Medicaid on your behalf from your estate after you pass. Most states' probate laws include real and personal property, such as a home, in the estate. Medicaid won't make your spouse sell your home after you die, but it may put a lien on your house in the amount of your costs after your spouse dies.
No. 5: There's not much I can do to plan ahead. Think again. Staying healthy as long as you can is a great strategy for reducing long-term care expenses. You can also take other steps to minimize the impact of long-term care expenses on your estate. Purchase a long-term care insurance policy. Consider combining life and long-term care insurance policies, which offer death benefits to survivors and some form of insurance protection against long-term care costs. Your state may also allow other options to protect your home. Depending on your situation, trusts and asset transfers may be useful, especially if implemented before the five-year look-back period of Medicaid to determine program eligibility. Discuss your options with an elder law attorney.
Reference: Motley Fool (May 20, 2016) "5 Long-Term Care Myths Debunked"