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The Dollar Stretcher

Angela was recently interviewed by Gary Foreman from The Dollar Stretcher.com on “The Costs of Long-Term Care." In this interview, Angela answers questions that frequently come up regarding the costs of Long Term Care and some options to consider.

Costs can vary greatly depending on where you live and the type of care you need.  However, a 65-year-old couple can expect a total of $220,000 in out-of-pocket healthcare costs in 20 years of retirement.

 Many people find it easy to ignore needing long-term care because of more immediate issues they are facing such as purchasing a home, saving for retirement, and putting kids through college. However, according to the U.S. Department of Health and Human Services, 70% of Americans who reach age 65 will eventually need Long Term Care.

 Self–funding means you feel confident you can pay for long-term expenses yourself if need be.  The self-funders don't buy LTC insurance. These individuals have plenty of money or other assets to pay for their LTC expenses. They have done retirement projections and have enough money to fund their retirement without running out of money so they feel confident that they can pay for health care expenses without jeopardizing their retirement for both spouses if married.  Self-funding can be a sound strategy if an individual or couple feels they have the assets to fund long-term care without running out of money in retirement. 

If you want to self-fund but you don’t want to bare the entire burden, you can purchase a long-term care policy to help. You may be willing to pay for the early costs of LTC insurance from assets and family assistance, but you want help if care is needed for a long time.  In this situation, you may want to consider an LTC insurance policy with a long elimination period of for example 365 days.  This way, assets and family assistance can help through the first year, then after that, the long-term care insurance kicks in.

One of the most common fears is that a person buys a long-term care policy and then never uses it. Therefore they feel that money was “wasted”.  You commonly don’t hear this concern with homeowners or auto insurance.   However, one way to make sure you are guaranteed some financial value from purchasing long-term care insurance is to purchase life insurance with a health care rider.  This way, if you need long-term care, you can pull money from your life insurance.  If you never need this money for health care, then your beneficiary receives the life insurance proceeds upon your death.  If you do need the money for health care, it is there for you, and your heirs will receive whatever money is remaining.   It is a good way to “hedge your bets.”

Well, there are a few options for retirees who can’t afford to self-fund or purchase long-term care insurance.  If they are a homeowner, they can consider a Reverse Mortgage Line of Credit.  Just be sure you get references to find a reputable lender who has reasonable fees.   You can also shop around for care.   If you are flexible, depending on where you live care can be cheaper in another state.  Also, the type of care you receive can reduce the cost, for example sharing a room at a senior living facility. Lastly, family assistance may be an option.  Again, if you are flexible, there are ways to reduce costs.