Most people don’t understand that, when it comes to future nursing home care, it’s very easy to be pound wise and penny foolish.
The penny in this scenario is the cost of planning ahead for nursing home care, either by investing in Long-Term Care Insurance or by creating an estate plan to shelter assets.
The pound is the cost of care. According to Genworth Financial, Inc., the average cost of nursing home care in the U.S. in 2017 was $7,148 for a semi-private room. That’s $85,776 per year. Compare that to the average household income for households aged 75 and older at just $30,635 (summarized from the US Census Bureau Current Population Survey Annual Social and Economic Supplement). Take things a step further: If the household is a married couple, they need $85,776 for one of them to live in a nursing home AND more for the other to remain at home.
Long-Term Care Insurance can seem pricey, but it costs pennies compared to privately paying for care. I advise all of my clients approaching age 50 to start shopping for Long-Term Care Insurance, and I explain that they need to “follow the math.” Investing, for example, $2,000 per year in a Long-Term Care policy over 20 years costs $40,000. That’s not even 6 months’ worth of care. We are living longer, but not necessarily healthier lives. Families are working longer and harder than ever, so the ability of most families to spare someone who is able to provide 24-hour care at home is extremely limited. In fact, the “children” are often older themselves and may not be physically able to provide the level of care needed. In short, most of us can safely assume that we’ll spend some time in nursing home care. That’s the safest assumption to make in order to do the most effective planning. Like all insurance, we hope we never use it, but it’s a small investment to make to assure we’re covered if and when the time comes.
Despite the difficulties involved, I have seen many families attempt to care for a loved one at home. “He’ll never go to a nursing home.” Of course, no one wants to go, but the fact remains that, in most situations, a skilled facility is safer and healthier for everyone, both physically and mentally. I have seen aging family caregivers injure themselves physically, place their elderly person in a position to be injured (inadvertently, of course), and fall victim to emotional “caregiver burnout,” sometimes lashing out at the loved one. In most of these situations, the family caregiver is working without pay, only so the nursing home can later be paid.
For those who can’t get Long-Term Care Insurance, usually for health reasons, but sometimes financial, asset protection planning is a must. Putting off this planning only makes it more expensive. Planning more than five years before it’s likely you’ll need nursing home care will involve legal fees of approximately one-quarter to one-half as much as waiting until the last minute to do something. Plus, if you wait, assets will be lost in the process. With advanced planning, you’re likely to be able to protect everything.
As you can see, many people try to save money in the present, only to pay it to the nursing home in the future, when the goal for most people is to save something to pass along to their children. Investing some time and money now, in good insurance, good planning, or a combination of both, can pay huge dividends later in the form of a saved inheritance.
This article is not intended as legal advice but is provided for informational purposes. Always consult with an attorney experienced in dealing with situations similar to yours. Frisse & Brewster Law Offices are located in Paris and Effingham, Illinois and Terre Haute, Indiana.
Long-Term Care Insurance provides comprehensive benefits for care in your own home, adult daycare, assisted living, memory care and nursing home. Often people think LTC insurance pays only for nursing homes. Nursing homes do cost more than any other type of extended care but many options exist. LTC policies give you choice of quality care in the setting you desire.
Planning prior to retirement for the financial costs and burdens of aging will safeguard your savings and reduce the burdens which are placed on family and friends. A need for care can happen at any age. The ability to obtain coverage will require “underwriting” which means you must have a certain level of health in order to get a plan. Once you have a policy the policy can never be canceled. Premiums are intended to remain level based on the age, health and amount of benefits you wish to have in place. Those decisions are made when you consult with a Long-Term Care specialist. They will ask several health, family history, and retirement planning questions in order to design an affordable plan.
The fact is Long-Term Care Insurance is easy and affordable asset protection. It is always best to act before you retire for the most affordable options.