The Long-Term Care Dilemma: How To Pay For It

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How are elderly American’s paying for their long-term care? We found a story in Time that discusses how some people are dealing with its astronomical costs.
One fact most people don’t understand about long-term care is if you are a disabled senior, Medicare will not cover your costs for daily help. With no social safety net covering the disabled elderly, many families are paying huge amounts out of pocket to care for their elderly loved one (as much as $100,000 in the last five years of life).

This leads to the question many people don’t want to address: How will you pay for your long-term care? You may think you’ll never need it but the odds are you will. As we’ve reported here at Passare, 70% of Americans age 65 and older will need long-term care at some point in their lives.

One alternative we’ve promoted is purchasing long-term care insurance. The problem is few can afford it. “Long-term care insurance is something that nobody wants to buy and the insurance industry doesn’t want to sell,” says Howard Gleckman, senior fellow at the Urban Institute.

Some analysts believe the problem with long-term care insurance is it’s too expensive for the average citizen and it’s not turning a profit for insurance companies either. This double-whammy has resulted in many insurance companies raising premiums on long-term care policies while others have stopped offering the product altogether.

We asked our insurance expert, Jeff Perry of the New York Life Insurance Company for a second opinion on long-term care insurance. “Some companies had to raise their rates to accommodate the increase in claims but I still think it’s a good time to get in the game for somebody who wants to have long-term care coverage as a piece of their plan,” said Perry. “Just like buying life insurance, the younger you are when you put it in place –the better rate you are expected to have.”

For those who cannot afford long-term care insurance, another option is Medicaid, which many seniors already rely on to pay for long-term care. But in order to qualify you have to spend down most of your assets, which is not an option for many who have worked their entire lives to save up a retirement nest egg.

Also keep in mind as our senior population continues to grow, “Medicaid programs will come under increasing financial pressure so it’s not clear what the program will provide in the future,” writes Time’s Penelope Wang.

Until more options develop, your best strategy is to purchase long-term care insurance if you can afford it. If not then do your best to, “stay healthy, save as much as you can and build a community network,” writes Wang. “People with strong social ties, research shows, live longer, happier lives.”

Read the story here.

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