I’m getting closer & worried – long term health care

Thanks to Baby Boomers and modern medical marvels, more Americans than ever are heading into their senior years (yes, that includes yours truly who turns 60 in two years), and we’re expected to live longer than ever, too. Barely 50 years ago, our average life expectancy was 62.5 years; today that number has risen to 78.2 years, according to the U.S. Census Bureau. Thank goodness for that! 

What does this mean for people like me?

That means that more Americans than ever will also soon be deciding how to handle their eldercare. Steve Casto, Retirement Income Specialist and author of Is Your Retirement Heading in the Right Direction?, says there are important questions and answers to consider before making that critical decision.

“The key thing to balance is the difference between what you think you’ll need and what you can afford between your liquid assets and insurance coverage,” Casto said. “If you don’t start by asking yourself the right questions, you’ll never get to the answers that will lead to a successful long-term care plan.”

Here are some questions – and their answers:

Q. Should I opt for nursing-home or in-home care insurance?
A. When selecting insurance plans, protect against your worst risk first. In-home care is more about maintenance, while care outside the home is focused on crises. Home care is good for when a person needs help getting around. If he has a stroke, he’d need to be cared for outside the home initially, so there is a need for both.

Q. What should I select as my daily allowance?
A. If your health deteriorates, a daily allowance of $100 per day could cover all your care outside the home, but only a third of the care inside the home. Your home-care costs could rocket to more than $400 or more per day, so plan for the worst.

Q. What is an elimination period?
A. Sometimes referred to as the “waiting” or “qualifying” period, this refers to the length of time between the beginning of an injury or illness and receiving benefit payments from an insurer. With long-term care, the typical elimination period is 90 days, which means you are responsible for covering the first 90 days of care on your own. Most people believe that Medicare covers the first 90 days, which is dead wrong. It only covers it under certain conditions, and not all patients meet those conditions, which include:

o A nursing home stay that follows a three-day hospital stay
o Admission to a nursing home within 30 days of hospital discharge
o A Medicare-certified nursing home
o Physician-certified need for skilled care on a daily basis

Your best bet is to be insured through a long-term care policy for that first 90 days.

“These are just a few of the issues,” Casto says. “A good starting point for those planning early is to completely discount the idea of getting a dime from Medicare. Even if it is still around when you need long-term care, the restrictions on Medicare are tightening. You’ll be lucky to get the program to pay for 10 percent of a nursing home stay.

“The real answer is to get a solid long-term care insurance policy that is based on a sound plan.”

Steve Casto is founder and president of Strategic Wealth Solutions, Inc. an Omaha, Neb.-based financial firm that manages money for investors in the Midwest. Steve helps clients reduce their tax bill, minimize their risk, and ensure they don’t outlive their money. He’s the author of Is Your Retirement Heading in the Right Direction? and offers presentations on how to increase income while reducing taxes.