Planning for your retirement years requires more than just saving money and deciding where you will live during your “Golden Years.” In fact, one of the most important aspects of retirement planning is planning for the possibility that you (or a spouse) will need long-term care (LTC) at some point prior to the end of your life. Given the average cost of nursing home care, it is essential to factor that cost into your retirement plans. One option for covering the high cost of LTC is to purchase a long-term care insurance policy, but is LTC insurance worth the cost? To help you figure out if a LTC insurance policy is right for you, a Kirkwood nursing home planning attorney explains how the insurance works and discusses whether it is worth the cost.
Why Is Planning for Long-Term Care Important?
The life expectancy of the average American has almost doubled over the last century. Consequently, there is a very good chance that you will spend decades, instead of years, enjoying your retirement years. The advances in medicine, science, and technology that have helped to increase the average American’s lifespan, however, has not yet found a way to stop the natural aging process. As a result, your chances of needing LTC at some point during your retirement years remains high. In fact, when you enter your retirement years (around age 65), you already stand a 50-50 chance of needing nursing home care prior to your death. With every passing year, those odds increase. At age 85, for example, you will have reached a 75 percent chance of needing LTC before you are gone. The reason it is imperative to plan for that care is the high cost of that care. Nationwide, the average cost of LTC in 2016 was $80,000 annually. Although LTC costs in Missouri tend to run below the national average, averaging just over $60,000 that same year, LTC costs are still substantial enough that pre-planning is essential if you don’t want to lose your entire retirement nest egg to those expenses.
What Is Long-Term Care Insurance and Why Might It Be Needed?
As a senior, you will likely depend on Medicare to cover the majority of your healthcare expenses. Unfortunately, however, Medicare won’t cover your nursing home expenses, and neither will a basic health insurance policy if you still have coverage. Consequently, you could be looking at covering your nursing home expenses out of pocket unless there is another option. Purchasing a separate long-term care insurance policy is one of those options. As the name implies, LTC insurance is specialized insurance aimed at covering expenses related to long-term, or nursing home, care.
Is Long-Term Care Insurance the Best Option?
Before running out and purchasing LTC insurance, you need to consider all your options and decide if a LTC policy is the best option for you. Some factors to consider include:
- How much will LTC insurance cost you over the lifetime of the policy? Premiums increase the older you are when you take out a policy; however, even a lower annual premium will add up if you are paying that premium for 20, 30, or even 40 years before you actually use the coverage.
- Find out if the policy has a waiting period during which time the policy will not cover expenses.
- Does the policy have an annual or lifetime maximum?
- What exclusions apply? Make sure the policy does not exclude mental or nervous disorders.
- Will the policy cover you outside of the U.S.? If not, are you planning to remain in the U.S. when you retire?
- Does the policy terminate at a specific age or after a specific number of years?
For most seniors who cannot afford to pay for nursing home care out of pocket and who choose not to purchase LTC insurance, qualifying for Medicaid is the only other option. Medicaid eligibility can be tricky though as well. If you believe there is even the possibility that you will need to rely on Medicaid if you need LTC in the future, including a Medicaid planning component in your estate plan is imperative.
Contact a Kirkwood Nursing Home Planning Lawyer
If you have additional questions or concerns, please join us for an upcoming FREE seminar. For more information regarding nursing home planning, contact an experienced Kirkwood nursing home planning lawyer at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.