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If you’re like most people, your plans for retirement include spending more time with your family, traveling, or catching up on hobbies and activities that have been put on hold during your working years. And, like most people, you’ve probably put money aside to fund your retirement. But what if your retirement suddenly includes an unexpected long-term care need?
According to the U.S. Department of Health and Human Services in their 2011 Medicare & You booklet, about 70 percent of people over age 65 will require long-term care services at some point. And, with advances in medical technology and healthier lifestyles, people are living longer than ever before.
The government has made it clear; it cannot afford to fund the nation’s long-term care costs. In fact, Congress tightened the financial requirements to qualify for Medicaid, the federally and state-funded program for those who live at or below the poverty level. And, recently rolled out a nationwide long-term care awareness program called “Own Your Future” which encourages people to better understand and plan for long-term care.
All of this can certainly present a significant challenge, but there is something you can do. Plan now.
Fortunately, many private insurance carriers are offering long-term care insurance—insurance designed to cover your care expenses should you find yourself in need of assistance. Although each policy has its own particular features and benefits, they do share some common characteristics. By learning what to look for now, you can better plan for the possibility of needing long-term care in the future.
Basically, long-term care insurance is designed to reimburse you for some or all of your expenses when you need long-term care services. Most policies let you select how much money the policy pays you on either a daily or a monthly basis. Long-term care insurance policies also include an elimination period or waiting period (think of this as a policy deductible) that you must satisfy before benefits are payable.
You also need to consider where you want to receive care. Many policies will cover care wherever you need it — whether that is at home, in a nursing home or in an assisted living facility. By selecting a policy that offers coverage for several different types of care, you ensure control over your future.
A comprehensive policy ensures you can maintain your independence and control over how and where your care is received.
The last major point to consider is how much care costs in your area. Just like the price of a house, the cost of long-term care varies between different cities and states.
According to the 2012 – Genworth Cost of Care Survey, the New Mexico average rate for a private room in a skilled nursing facility was $206 per day or over $75,000 annually.
With so many variables in each plan, and so many plans available, it’s nearly impossible to make an educated decision without seeking the advice of a qualified expert. But it’s clear that the need for long-term care is real, and one that could potentially threaten even the best laid retirement plans.
By taking the time to act now, you could avoid a costly mistake in the future.
Leonard C. Salgado is a member of the National Association of Insurance and Financial Advisors and works for the Pinnacle Advisory Group, LLC, Albuquerque. He can be reached at 505-401-6324.