Do you have a family member who is receiving some form of long-term care? If you don’t, the chances are good that someday you will – and that day may not be too far away. As the U.S. population ages and life expectancies increase, the need for long-term care and the rising cost of that care are becoming important considerations for many individuals and families.
Long-term care refers to a range of services and support one may need to meet their personal care needs over an extended period. This type of care may be available in a person’s home, at an assisted living facility, or at a nursing home. These services can range from help around the house to 24-hour care in a nursing home or memory care unit.
Though the cost of long-term care varies widely across the United States, it has been rising and will continue to rise. According to Genworth Financial, the current average cost of a private room in a New York nursing home is $177,755 per year.
Long-Term Care Payments or Retirement Savings?
A recent survey conducted by The Harris Poll on behalf of Nationwide asked 1,334 U.S. adults 28 years old or older about balancing caregiving obligations and their long-term financial situations. Results revealed that many adults are sacrificing long-term financial well-being to give or pay for the rising cost of long-term care for parents or other loved ones.
Some people leave good-paying jobs to take lower-paying jobs with more flexibility so they can care for loved ones with long-term care needs. This can derail a person’s career and cost them a significant amount of earning potential in the long run. Other people may be able to keep their full-time jobs but pay out-of-pocket expenses for which they will never get reimbursed. The Harris Poll/Nationwide survey found that people pay an average of $338 per month for caregiving expenses.
The survey also found that more than half (56 percent) of respondents said they are willing to borrow from their retirement accounts to help pay for long-term care for a loved one. Borrowing from a retirement account can drastically reduce the account’s ability to generate enough funds for retirement. Nearly half (43 percent) of the survey’s respondents are concerned that caregiving expenses will keep them from retiring.
Planning for the Rising Cost of Long-Term Care
Though the cost of caregiving can have a significant effect on a family’s finances, only 17 percent of the survey respondents said they have discussed long-term care and its costs with a financial professional. Of the adults surveyed, 30 percent said that their financial professional has not brought up the subject of long-term care planning with them.
Careful planning, however, can help protect your assets. The belt-and-suspenders approach is to purchase long-term care insurance while you are healthy enough to qualify, and to make sure you receive the benefits to which you are entitled under Medicare and Medicaid.
Medicare
People are often confused over the differences between Medicare and Medicaid. Though their names are very similar, the programs are quite different. Medicare is an “entitlement” program, a federal health insurance program in which most people enroll when they turn 65 years old. There are no financial qualification rules. Medicare has two primary parts: Part A and Part B.
Medicare Part A covers in-hospital care, skilled nursing facility care (only up to a maximum of 100 days per spell of illness), some home health care services, and hospice services. The rules for nursing home coverage are very strict and, in fact, Medicare pays for less than nine percent of nursing home care in this country.
Medicare Part B covers clinical research, ambulance services, durable medical equipment, mental health treatment and limited outpatient prescription drugs.
New York Medicaid
Medicaid is a joint federal-state program subject to certain federal requirements, each state implements its own regulations on how the program is managed. Medicaid is not an “entitlement” program like Medicare, but rather a means-tested program which looks at an individual’s income and assets. Medicaid eligibility is determined after the proper application is submitted to the state. There are many Medicaid programs available in New York, from basic medical coverage to nursing home care.
We assist seniors and their families in making the tough decisions regarding long-term care planning, including whether Medicaid eligibility may be an option. Tools such as an Irrevocable Trust can help seniors protect their home and other assets so that they may secure Medicaid benefits in the future.
Contact the experienced elder law attorneys at Kurre Schneps today to learn how you can best plan for the rising cost of long-term care.
