I periodically participate as a panelist in Twitter (X) chats to answer questions about personal finance topics. Below are seven questions that I answered recently during a #creditchat about long-term care:
What is long-term care planning, and why is it important for financial security as we age?
Long-term care (LTC) planning is planning for a time in our life when we may no longer be able to perform activities of daily living (ADLs) such as eating, bathing, dressing, using the toilet, walking, and getting in and out of a bed or a chair (transferring). Without a LTC plan, people can deplete their financial resources paying for LTC services in later life.
At what age should people start considering long-term care planning, and why is it beneficial?
Certainly by your 50s, you should develop a LTC plan although some people could need LTC services earlier (Think: Christopher Reeve’s severe injury). Early planning is useful for peace of mind. In addition, LTC insurance premiums are cheaper in your 50s or early 60s vs. later life.
How can long-term care planning help reduce the financial burden on family members?
Unfortunately, some people expect their children to be their LTC plan and never discuss this expectation with them. Caregiving is a major financial and emotional burden. Caregivers often lose income, retirement savings, and even jobs to care for a family member. This burden often falls on women, many who can least afford to lose jobs, income or Social Security work credits.
What types of services are typically covered under long-term care insurance?
It depends on the specifics of the policy contract so you need to review it carefully. LTC policies typically cover skilled nursing home care, assisted living, home health care, adult care, and respite care. Policies typically pay daily amounts for services up to policy limits (e.g., 3 years).
What are differences between LTC insurance, Medicare, and Medicaid in covering LTC needs?
LTC insurance is an insurance company contract; Medicare and Medicaid are government health care programs. Medicare does not cover non-medical LTC (custodial care services) unless medical care is needed. Very specific rules apply. Medicaid does cover LTC services for people with limited income and assets. Guidelines for Medicaid assistance vary among states.
Where can people go for advice about long-term care planning and its potential costs?
A licensed insurance broker, a certified financial planner®, and a local State Health Insurance Assistance Program (SHIP) office with trained volunteer insurance counselors are good resources. For info about how to find SHIP programs in every state, see https://www.shiphelp.org/.
What are some common misconceptions about long-term care planning?
People think they won’t need LTC services. In reality, 70% of people turning 65 will need some type of care. Also, people think they have to buy LTC insurance but there are other options (e.g., self-insurance and a continuing care retirement community). The important thing is to make a plan!
This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.
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