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How to Avoid Long-Term Care Surprised by Planning Ahead

by: Jim Vogel

If you or a loved one needed a nursing home next week, would you know how to pay for it? Planning for long-term care is important. However, too many people fail to talk about it with their loved ones in advance and end up without a plan when the time comes to begin making decisions about long-term care.

Anticipate All of Your Health and Care Costs

The costs of medical care seem to rise with age. For adults who are 65 and older, Medicare can provide help with those costs, but coverage can be limited. That’s why most seniors who are eligible for Medicare opt for additional Medicare Advantage coverage. Medicare Advantage plans can help offset expenses for things like eye exams and dental care. You should do your homework to figure out whether Medicare Advantage coverage could help you or your senior loved one with medical expenses down the road.

One thing to keep in mind is that there is very little Medicare coverage for long-term care. If you have certain Medicare plans, you may be covered for short stays following a hospitalization or to treat or prevent medical conditions. However, for most seniors, the average annual costs of their long-term care needs will not be covered by Medicare, Medicaid, or any other health insurance. You can expect to pay up to$100,000 each year for skilled care facilities, and you should expect to cover those costs in other ways.

Start Planning for Long-Term Care Costs ASAP 

If you or a senior dependent requires a lengthy stay in a long-term care facility, you could be left footing a huge bill out of your own pocket. However, if you can plan ahead for those costs, you may have many more options for covering those high long-term care bills. For one, you can research insurance plans that may help you pay for long-term care. Long-term care insurance plans tend to be expensive, but if you sign up when you are younger, your premiums have the potential to be much less than if you shop for plans when you are older.

Opening an HSA is also a good option for adults who are planning for long-term care costs ahead of time. You can begin contributing to your HSA early, but those contributions must stop when you become eligible for Medicare. You can use the money in your HSA to help with care costs even if you are enrolled in Medicare.

Of course, financial planning is not the only way you can anticipate your long-term care needs. Better health choices, such as getting more exercise, can help seniors fight off health conditions that could require a lengthy stay in a long-term care facility.

Know How to Pay for Long-Term Care Without Planning

Many times, the need for long-term care is unexpected. Although most seniors will need some form of long-term care in their lifetime, many still do not plan appropriately for it. If you did not plan ahead, but you do own a home, you may be in luck: You could use home equity to get the cash you need for care costs. There are several different options open to homeowners, from taking out a reverse mortgage to selling your property outright. If you think you will be returning to your home, or if long-term care is needed by a loved one, a reverse mortgage may be your best bet. Make sure you know the pros and cons of taking this kind of loan out on your home. Confirm that you can handle the payments or you could end up losing your home.

Another funding choice for long-term care costs is to cash out life insurance. If you have tons of coverage or multiple policies, this could be a safe bet for you. Once again, read the fine print before you make any major financial decision to pay for long-term care.                  

Don’t let long-term care cause you unnecessary stress or derail your retirement plans. If you can manage it, make a plan for long-term care ahead of time. If not, do your homework to figure out a financial option that will work best for you.