How to Prepare for Long Term Care

Most people have a vague understanding of the fact that their health will decline as they age. However, few people take the time to build a financial plan for what will happen if they need assisted living, or long-term care. It’s not a fun topic to think about, but having a strategy in place in case of a worst-case-scenario can provide immeasurable comfort to both you and your family.

Let’s go over what long-term care is, what you can expect if you need it someday, and how to put a plan in place to alleviate some of the financial and emotional pressure if you’re ever faced with long-term care needs for you or a family member.

What is Long-Term Care?

Long-term care is defined as a range of non-medical services and support provided to an individual who can no longer care for themselves. This means they struggle completing tasks that are required to live in the day-to-day.  In long-term care insurance terms they are referred to as “activities of daily living.” These tasks include:

  • Bathing
  • Dressing
  • Using the bathroom
  • Eating and drinking
  • Moving (transferring from a bed to a chair, or walking around)
  • Basic housework
  • Managing finances
  • Preparing meals
  • Communicating needs in person, or via phone

If a person can’t complete these tasks, they may be a good candidate for long-term care. This might mean they move into an assisted living facility that has staff available to help with daily activities that they struggle to perform on their own. It may also mean having in-home health help attend to their needs within the comfort of their own home.

What Costs Can You Expect?

Unfortunately, long-term care can be expensive. In 2018, the national average full-time home health care cost was $4004/month. Assisted living facilities cost an average of $4,000/month. Adult daycare reduces the total cost to $1,560/month, but leaves many families alone to shoulder the stress and burden of helping their family member perform daily activities when they’re not at their adult care center.

If these costs have your head spinning, you’re not alone. Long-term care is a colossal financial stress on an individual and their family. Luckily, there are a few ways you can plan ahead to reduce the stress should you be faced with a situation where you or a loved one requires long-term care.

Protect Your Family By Thinking Ahead

There are a few options when putting a strategy in place for potentially needing long-term care in the future:

  1. Investing in long-term care insurance.
  2. Making it a savings priority to build your retirement savings to a point where long-term care could be self-covered. As shown above, this could be a significant sum.
  3. Qualify for Medicaid, generally available to low-income patients.

If you have the time and the funds, calculating long-term care costs into your retirement savings goal isn’t a bad idea. This is especially true if you have any family history of adults requiring long-term care for any number of reasons. However, for some, long-term care insurance may also be a viable option. Medicare will pay for a small part of your long-term care, but long-term care insurance can (in some cases) make up for a large portion of anything left over.  Long-term care insurance covers the cost of unskilled care, whereas Medicare covers skilled medical care. Medicaid is an option for those who do not have the savings to cover their long-term health costs.  

However, long-term care policies can have expensive premiums, and coverage can vary.  And if you are already experiencing the need for long-term care, you likely will not be insurable.  Speaking with a financial planner to determine whether long-term care insurance is right for you, and to help you construct a financial plan that prioritizes saving for potential long-term care in the future, can help to alleviate a lot of the stress you may feel around protecting your family against the steep financial implications of potential long-term care solutions. Want to learn more? Schedule a call with us today. We’d be happy to help you talk through all of your options.

Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.

"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.

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