Baby Boomers and seniors MUST plan for the future! The possibility of needing long-term care is high, and the effects of having no coverage can be devastating.
In Part 2 of this three part series, we re-join Brian Allred, Long-term Care Insurance Specialist.
Long-term Care insurance solutions: Where to start
Getting started with long-term care planning can be challenging. Understanding the activities of daily living, how to qualify to receive benefits and finding the motivation to own a plan are all good places to start.
In this article, we’ll look at four aspects of long-term care, cost of care and three ways to pay for care.
When shopping for a long-term care plan, I recommend taking some time to understand the cost of care in your area. Genworth, a long-term care insurance provider, puts together a survey each year. Savvy shoppers can study up on the costs by visiting Genworth’s cost of care calculator.
How much coverage necessary?
The cost of care is separated into 4 categories, Home Health Care, Adult Day Care, Assisted Living and Nursing care. Modern long-term care insurance policies have provisions to pay for each of these types of care. When determining how much coverage to purchase, I recommend two approaches.
If it were your turn to receive care, where would you prefer to receive that care? Knowing this will help you determine if purchasing a plan to pay for home care or assisted living is best for you
As part of this plan you may also set a goal for the number of hours of care you’d like to have. For example, purchasing a plan that will pay for 20 hours of home care per week, or purchasing a plan that will pay 100 percent of the cost of assisted living. Of course, we don’t know what the future has planned for us. Even having a basic plan will reduce stress on family members and preserve retirement savings.
Covering costs
After determining how much care is needed, there are three ways to pay for that care. First is to self-insure. Second, rely on Medicaid. Third, own an insurance plan. Self-insuring is defined as using one’s own money to pay for care. In the following paragraphs, we’ll discuss the first two methods, exploring option three next week.
Using one’s own finances is a common method of paying for care. The positive of using one’s own funds is that no additional outlay of money is needed. A negative is that the long-term care events are unpredictable and result in a quicker than normal depletion of funds.
Second, relying on Medicaid to pay for care. Relying on Medicaid is not a guarantee. To qualify to receive benefit payment from Medicare, one must qualify. There are two types of requirements to qualify.
1. General requirements
2. Financial requirements
Per www.longtermcare.gov, to meet the general requirement one must be one of the following:
• Age 65 or older.
• Have a permanent disability as the term is defined by the Social Security Administration
• Be blind
• Be a pregnant woman
• Be a child, or the parent or caretaker of a child.
Additional requirements are.
1. Be a U.S. citizen or meet certain immigration rules
2. Be a resident of the state where you apply
3. Have a Social Security number.
Medicaid financial requirement vary by state. During the eligibility review process, Medicaid will evaluate a person’s regular Social Security retirement benefits or disability payments, Veterans benefits, pensions, salaries, wages, interest from deposit accounts and dividends from stocks and bonds. Depending on retirement income levels some retirees may need to spend down their assets to qualify. This could mean prematurely liquidating assets to meet income levels determined by the State where one is applying for benefits.
For more information or for state specifics, please visit:
Brian Allred, Long-term Care Insurance Specialist
CA Lic: 0E15853
(951) 901-0866
brian@theallredagency.com
www.briankallred.com
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