October is Long-Term Care Planning Month: Do You Have a Plan in Place?

Happy Long-Term Care Planning Month! Observed each year in October, Long-Term Planning Month is a time to bring awareness to the special types of care and resources used to help adults in the later stages of their lives. Long-term care refers specifically to the types of services needed to assist individuals in getting through routine activities such as self-care habits, meal preparation, dressing, and bathing.1 This type of care can be an essential part of maintaining a high quality of life as you age – and having the right finances in place to fund long-term care services is essential. The good news is, it’s not too late to start planning!  

Why start planning today? 

According to the most recent data from the U.S. Department of Health and Human Services, nearly 70% of 65-year-olds will eventually need long-term care services or support.2 With this in mind, it is important to prioritize having proper preparations in place to foot the cost. Unfortunately, most insurance plans do not include coverage for non-medical or long-term care and assistance for seniors, and options like Medicare cover only limited periods of in-home care or facility stays.3  

Delaying the planning process for this stage of life can present challenges when the time comes to utilize these services. And long-term care insurance providers generally do not approve individuals over the age of 75 or those with a debilitating condition.3 Securing a plan in advance will allow you to make smart money moves today and ease your financial burden down the line!  

Assess Your Current and Future Healthcare Needs 

An important first step in long-term planning is to take stock of your past and current healthcare needs. A variety of factors including age, health, marital status, and gender can all play a role in determining the rates you pay.3 This can be a big incentive for buying a policy now, if you have the opportunity, so that you can secure a lower price point and then increase your coverage as you age! 

Once you’ve assessed your existing needs, the next step is to understand your options. Everyone has their own unique vision for their future – especially when it comes to aging. So, it’s important to know what resources and avenues are available so that you can plan according to your own personal preferences. Let’s look at three important dimensions of long-term care planning: caretakers, insurance coverage, and housing.  

  1. Caretakers 

    Family members: According to a survey from the Nationwide Retirement Institute, nearly 7 out of 10 people would prefer to rely on a spouse or family member while receiving long-term care at home.4 However, many would only expect a family member to provide this care if they were able to offer them compensation for their assistance and avoid placing a significant burden on their personal lives. It’s important to consider if care from family members is an option that is suitable for both you and your loved ones, or if it may be best to opt for professional care.  

    Professional Caregiving: Another option people often consider is hiring a caretaker to provide assistance while at home. The national median cost of this arrangement was $61,776 in 2021, so it may not be feasible for everyone.5 Thankfully, these costs can be greatly reduced under an insurance plan or with adequate savings in place.  
  1. Insurance Coverage 

    Medicare: Many people assume that Medicare will cover long-term care – but the truth is, Medicare and most regular insurance plans simply don’t offer such coverage.6 While Medicare is a great option to have in place for traditional medical care coverage, fortunately, there are other avenues for long-term care coverage at your disposal.  

    Medicaid: Though Medicaid offers custodial care that includes assistance with daily tasks, it is often difficult to qualify for. This coverage also may not cover all assisted living expenses in many states.3 To be eligible for Medicaid, you must have a depleted source of assets, which may be as low as $2,000 for a single person. Many states have “partnership programs” to help alleviate the costs of long-term care. These policies allow you to protect your savings by qualifying for Medicaid with a higher amount of assets.3 Even after obtaining Medicaid coverage, you will be limited to receiving care from facilities that accept funds from government payment programs. 

    Long-term care insurance: This type of insurance acts as a supplemental policy to your normal health insurance by covering the types of care you need to complete daily activities comfortably. With long-term care insurance, you are able to receive assistance if you have a chronic medical condition, are suffering from a disability or disorder impacting your functional abilities, or need additional assistance due to impairments brought on by aging.3 Getting insurance specifically for this care can be life-changing, both for your quality of life and your bank account.  

    As always, it’s important to discuss your specific situation with your financial advisor and any government agencies or insurance companies to see what coverage is best for you. 
  1. Housing 

    Independent Living Communities: Typically apartment-style dwellings, independent living communities afford seniors the opportunity to live in close proximity to one another, while reaping the benefits of a strong neighborhood and maintaining personal freedoms.7 While there are opportunities for connecting and shared experiences, residents still lead independent lives and are responsible for their personal care and livelihood.  

    Assisted Living Facilities: These facilities offer a bridge between independent living and full-time care. The staff extends aid and services for individuals that ease daily routines and medical needs; however, residents do not require around-the-clock care.7 A Cost of Care Survey by Genworth revealed that the annual median cost of a private room in an assisted living facility was $54,000 in 2021.8 This is, of course, a major bill that not everyone is prepared to pay, but planning ahead can certainly put your finances in good shape for future care-related living facilities.    

    Nursing Homes: Skilled nursing facilities provide care for those who need 24-hour assistance or acute specialized services. These facilities can provide short-term care services, for instance, in cases where a patient is recovering from surgery or an illness. Longer-term or permanent care residences are also available,7 with specifically trained nurses and staff to assist residents with daily needs. In 2021, the median cost for a room in a nursing home care facility was $94,900.8 Like the cost of assisted living, depending on your financial situation, the cost can be potentially devastating to retirement savings. But it doesn’t have to be! By planning in advance to foot these bills, you can access the incredible benefits of individualized care without worrying about the financial impacts. 

    Aging in Place: In 2022, Bank of America’s Homebuyer Insights Report revealed that 70% of Gen X and Baby Boomers are planning on aging in place throughout their retirement years.9 Whew- that’s a lot! Given the comfort and peace afforded to someone in their own home, it is no surprise that people would like to remain at home well into advanced retirement years. However, aging in place has the potential to be a big commitment financially. From monthly payments to regular maintenance to the need for major upgrades due to safety or accessibility, the costs can add up. One way many people mitigate these costs and attain their dream of aging in place, is by accessing their home equity with a reverse mortgage. By strategically utilizing the power of your home to bolster your financial resources, you may secure the ability to receive long-term care from the comfort of the home you love.  

Take Stock of Your Financial Preparedness 

With all of these facets of long-term care planning in mind, it’s essential to assess your personal financial preparedness. Taking the time to put together a plan now can make all the difference in enjoying your golden years to the fullest. An important part of this is taking note of your current assets, savings, pensions, investments, and Social Security benefits, as well as liabilities and expenses. These may provide an indication of what level of planning is needed today. Getting your finances in line, particularly with the help of professionals, can allow you to set up a plan to foot the bill for life-changing care in the future. Retirement should be a fruitful time to reap the benefits of your work over the years, and with proper planning, it can be!  

Use the Power of Planning 

To create a comprehensive plan for long-term care, you must be in a position to invest in your current and future healthcare needs. Whether that means paying directly for care services or relying on insurance specifically designed to help with these costs, one way to increase your spending power in retirement is through a reverse mortgage from Longbridge Financial.  

A reverse mortgage is a specially designed loan for homeowners aged 62 and above. Also known as a Home Equity Conversion Mortgage (HECM), this program has been insured by the Federal Housing Administration since 1988. Reverse mortgages work by allowing you to convert a portion of your home’s equity into cash without having to sell the home or make regular monthly mortgage payments (keeping up with property taxes, insurance, and maintenance is required). Unlike a traditional mortgage, where you must begin repaying the loan right away, you don’t have to repay funds received through a reverse mortgage until after a maturity event occurs, such as when you permanently leave the home.  

More good news? The income tax-free10 money you receive from a reverse mortgage can be used in any way you like, such as offsetting healthcare expenses to make it easier to age in place or setting aside funds to help pay for long-term care in the future. Another unique feature of the loan is that there are multiple ways to receive your reverse mortgage funds depending on your individual goals: a lump sum, monthly disbursements, a reusable line of credit, or a combination of these.11 Whatever method you select can help you plan ahead and invest in your future.  

Now that you’re equipped with a better understanding of long-term care, the challenges you may face, and the different options available to you, it’s time to put your plan in place – and what better time to act than Long-Term Care Planning Month!   

To learn more about reverse mortgages and determine if this powerful financial solution is right for you, contact our team today

1. https://nationaltoday.com/long-term-care-planning-month/ 

2. https://acl.gov/ltc/basic-needs/how-much-care-will-you-need 

3. https://www.nerdwallet.com/article/insurance/long-term-care-insurance  

4. The Nationwide Retirement Institute® 2021 Long-Term Care Consumer Survey,” Nationwide/Harris Poll survey (2021). 

5. https://www.fidelity.com/viewpoints/personal-finance/long-term-care-planning  

6. https://www.medicare.gov/coverage/long-term-care  

7. https://www.urmc.rochester.edu/senior-health/long-term-care/facility-types.aspx  

8. https://www.genworth.com/aging-and-you/finances/cost-of-care.html 

9. https://newsroom.bankofamerica.com/content/newsroom/press-releases/2022/12/bofa-survey–70–of-gen-x-and-baby-boomers-retiring-in-the-home-.html  

10. Consult a financial advisor and appropriate government agencies for any effect on taxes or government benefits. 

11. Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages. 

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