SURVIVING THE COST OF LONG TERM CARE

Our population is rapidly aging. By the year 2030, the percentage of individuals over the age of 65 will double. Yet, we know that longevity does not equate to a high quality of life. Often with longevity comes a need for long term care. And, because of the cost of such care, which can exceed $70,000 per year, there exists the very real prospect of financial ruin for many people who do not properly plan for this possibility.

To compound the issue is the fact that 40% of all long term care is provided to individuals under the age of 65. Long term care is not just a dilemma for the elderly, though the financial burden of providing such care tends to fall on the older generations, whether the care is provided to a frail, elderly individual or to a disabled child.

Many people mistakenly believe that Medicare will pay for long term care. It will not. Medicare pays for rehabilitative or skilled care, never custodial care, and will only pay for a limited amount of care, for example, a maximum of 100 days of care in a nursing facility.

This leaves individuals with two sources for funding the care: private payment (which includes long term care insurance) and Medicaid.

Currently, long term care insurance pays for 7% of such care, though I suspect that number will rise, as more individuals become aware of the issue. Many policies of long term care insurance will pay for an insured’s care at home or in an assisted living residence. Since people tend to fear entering a nursing home more than any other aspect of long term care and since many assisted living residences are providing high levels of assistance, long term care insurance may help prevent the need for a protracted stay in a nursing home.

It is worth consulting a product specialist who can advise you as to the appropriateness of the insurance. Many people are turned off by its cost, but the cost can often be reduced based upon the features of the particular policy chosen. Unfortunately, certain individuals will never qualify because of pre-existing health conditions, such as Parkinson’s disease and Alzheimer’s.

For those who can not afford insurance or who cannot qualify, there is Medicaid. Medicaid is a government program that provides medical assistance to needy individuals. The program pays for approximately 50% of all long term care in the United States. In New Jersey, Medicaid pays for care in the community, such as adult day care centers; in nursing homes, and in assisted living residences.

For those individuals seeking qualification for Medicaid, the Elder Law practitioner is often called upon to design a plan that will qualify the potential applicant for the Medicaid program, while preserving as many of his assets as possible. While few people, if any, are excited by the prospect of qualifying for Medicaid, most realize that the cost of long term care could easily bankrupt them. The fact that Medicaid, a welfare program, pays for 50% of long term care is evidence of the fact that the cost of long term care can devastate an individual’s finances.

With over sixty discrete techniques to qualify for Medicaid, the amount of money that can be saved through Medicaid planning is often surprising. The money saved can then be used to supplement the individual’s standard of living, provide support for his spouse, and preserve a legacy for his family.