Every day, we see clients for whom long-term care is the elephant in the room. They feel they can’t afford the costs, but they also feel they can’t afford not to have it either. So their solution is to pretend they don’t see the “elephant” and try to ignore the problem until it goes away on its own. This unfortunately often leads to our metaphorical elephant trampling their life savings and any future inheritance they are trying to leave behind. The older you are, the more expensive a long-term care policy gets, and if you get sick before you have long-term care protection in place, it’s too late. Insurance companies are looking out for their bottom line, and an already ill senior will scare them off.
The costs for these policies are rising faster than inflation too. Therein lies the conundrum for Boomers and Seniors: They’re living longer than their parents did and that means they need more money to make it through “old age”. Finding long-term care is a tough and complicated process. You’ll need to find a place that cares for people with your (or your loved one’s) circumstances. You need to find a place with the right facilities and staff, a place that leaves you with a good, safe feeling. And you have to be able to afford it too. This is not any sort of one-size-fits-all situation. Everyone has their own specific services and conditions that they or their loved ones will need met. Remember, what we call “long-term care” is a broad category, with options ranging from live-in facilities to your own home.
The greatest threat to the financial security of Boomers and Seniors is the cost of long-term care (and Obamacare will not assist with this). Assisted-living facilities are now climbing toward the $7,500-a-month mark and a private room at a nursing home will range from $500 – $600 a day.
Many people are choosing to live in retirement communities where they can still be in charge of their own day-to-day lives, but without many of the regular stresses of maintaining their own home. This option tends to be a little more expensive than living in their own home, but it does give the option of “aging in place”. Residents live in their own apartment and can increase their levels of service as they need them. For example: full independent living, adding visits from healthcare workers, even to the communities own skilled nursing care facility.
The least expensive option is of course still in home healthcare, but it has its other perks too: It doesn’t require you to move, your mortgage is probably already paid off and you already know where everything is. Unfortunately the cost of home healthcare is rising as well and may be more than many people realize when it comes time to pay. Thankfully, there are community healthcare programs may be able to help with home healthcare for those who qualify.
Some seniors have chosen to get long-term care insurance to help with these costs, but that’s also getting more expensive as companies raise their rates while cutting back on their coverage. In addition, this insurance is getting more complicated, as it now has to encompass aspects such as protection of the surviving spouse, caregiver issues, scams/ID theft, and making sure you have an advocate to fight for your rights in a system that’s slanted against you.
In short, we’re living longer, and unlike previous generations, people are generally not living with or even near their children. Seniors are going to need more money for this longer life and for any unforeseen medical problems that may arise.
Do you know what the fastest way for a Boomer or Senior couple to become an impoverished Boomer or Senior couple is? Simple, one of them just needs to become ill before they get long-term care insurance. We see it every day, people who have worked hard and saved money all their lives are forced to see it wash away in a flood of medical bills as they age. It is truly heart-breaking, because, if you’ve managed to squirrel some money away, you could probably have afforded long-term care.
Our life expectancies are going up these days and so is the cost of healthcare, the distance seniors are living from their children and families, and the financial pressures on Medicare and Medicaid. The new Affordable Care Act, in fact, stipulates $500 billion in Medicare cuts over the next decade! Where do you turn if you or your spouse gets ill? Home health care? Adult day-care? Assisted-living? A nursing facility? Respite-care services, which allow the caregiver to drop off the senior for a limited period? Who’s going to pay for it? And for how long? These are the questions to ask now, while you still have time to plan. If you haven’t purchased long-term care before you or your spouse become ill… forget about it. No one will insure you once you’re sick! If this happens to you, you’re going to be out of time, out of options, and very quickly out of money. And if you’ve planned to leave something for your heirs, there may be nothing left to leave to them other than a pile of bills.
It’s an old (but true) cliché: those who fail to plan are planning to fail. When it comes to healthcare expenses as you age, you fail to plan at the risk of yourself and those you love.
Dennis Sullivan founded The Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates. He has over 25 years experience helping people and their families. He’s the author of several books, including The Seniors & Boomers Guide to Health Care Reform and Avoiding Nursing Home Poverty. Mr. Sullivan has also written several special reports on estate planning, and hosts a series of area workshops on estate planning and asset protection which are open and free to the public.
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