By Julian Guilfoyle
“Age is an issue of mind over matter. If you don’t mind, it doesn’t matter.” ~Mark Twain
The long-term care situation inherited by baby boomers presents a grim and worrisome reality. In addition to the emotional burdens faced by spouses and children, the financial burden is simply devastating for most Americans and their families. The U.S. Department of Health and Human Services conducted a study of long-term care in America and some of its’ findings are particularly noteworthy. They found that more than 70 percent of Americans over the age of 65 would require long-term services at some point in their lives. Forty percent of Americans who reach age 65 will require a nursing home stay with twenty percent of those requiring long-term care for longer than five years. When required, the average cost of a private room is $219 a day, or $79,935 a year.
Many boomers have already experienced, first-hand, the limits of Medicare when attempting to provide for their aging parents. Under the best-case scenario, if a loved-one requires “skilled” care or therapy, Medicare can cover up to 100 days of care in a facility. Of those, days 21-100 require a co-pay from the Medicare recipient. Further, this care is only provided if the person is transferred to the facility after three consecutive days in a hospital (which believe it or not, is harder than it seems).
The safety net providing long-term care services for seniors who can no longer afford it is Medicaid. The income and asset limits imposed on Medicaid recipients are closely scrutinized and verified. In addition, they require substantial “spend-downs” where seniors must pay privately for their care. This is financially ruinous for women because they have longer life expectancies and many live their golden years with a fraction of the savings they had accumulated.
There is a solution for this epidemic in the form of long-term care insurance. However, few Americans have purchased this insurance because of the negatives surrounding these policies. Many have seen their premiums increased as insurance companies compensate for the increased amount of people who actually require the benefits. As premiums became unsustainable, especially after the income loss associated at first death between spouses, many of these policies began lapsing or having their benefits reduced. In addition, under the best case scenario, meaning one never requires to use their long-term care insurance during their lifetime, they don’t receive any benefit from the substantial premiums they have paid.
Few will face any tax during their lifetime that can equate to the cost of long-term care burdened by the majority of seniors. There are ways to protect your family from this catastrophic financial load, but different circumstances require different solutions. To discuss these solutions please call our office at 800-798-5297.
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