The American Medical Association found that one out three people require long-term care during their life time. The cost of care is rising to $75,000 per year approximately. This can turn best retirement plans into disorder and confusion.
"What many people don't realize is that Medicare is just a health insurance policy," said Pat Ramsey, owner of the Edgewood Center, a skilled nursing home and rehabilitation facility in Portsmouth.
AdvertisementMedicare pays for 100 days of skilled care for each bout of illness. After 3 days in hospital for this to take effect, After 100 days, again go home for 60 days - the waiting period before they can avail another 100 days.
"Many people wait until someone is critical before they look into alternatives for long-term care," said Nancy Euchner, owner of AgeQuest Eldercare Strategies in Portsmouth.
"Someone has a stroke or other medical problem necessitating the need to go into a nursing home or rehabilitation facility," she said.
Euchner said long-term insurance is just one more expense that many people can't afford.
"They are saving for their kids' colleges and have mortgages to pay," she said. AgeQuest often consults with older couples and children who are looking for advice for their parents.
You can purchase a long-term care policy if you are between the ages of 18 and 80.
"Most people start thinking about long-term care in their 50s as part of their retirement planning or when their parents hit their mid 70s and 80s and start needing care," said Patricia Bennett, president of Longevity Planning in Portsmouth.
"There is no better wake-up call than starting to see Mom or Dad paying $5,000 to $9,000 per month for their care."
"Either way, having your policy keep pace with the increasing cost of care is very important," Bennett said.
"By the time that 50-year-old is age 75, their policy is going to be worth $16,125 per month and their total pool of benefits is going to be $580,517."
If that same person were to wait to age 65 to purchase that same policy, it will cost an average of $303 per month.
Couples can elect to add on a shared-care rider which says that if they don't end up using all of their benefits, their remaining pool of benefits goes to the surviving partner.
Rather than wait till you are diagnosed with a chronic illness like Parkinson's or multiple sclerosis, better to insure yourself before anything unfortunate hits you - depleting your assets and independence.
The Immediate Care Plan is an option, which is a single premium, immediate annuity to pay for those who don't have Medicaid or a long-term plan. It guarantees monthly payments for life and is a solution for the elderly who need immediate long-term care.
Unlike a typical immediate annuity that is based only on age and sex, Immediate Care is based upon age, sex and health. You don't have to be in good health to qualify for Immediate Care. You have to be 62 years old and own a house or have significant equity in some property.
"Using a product such as Immediate Care is a way to put a fence around the cost of care," Bennett said. "This can allow families to avoid Medicaid and stay private pay for life."
"They will not take your home," Ramsey said. "But they do look back at your assets over a five-year period. If you sold your house a few years earlier under market value to a child, you could not be eligible for Medicaid."
"If someone received, say, $200,000 for their home and spent $50,000, the bank would pay the balance to the person's heirs," Bennett said.
Hannah Punitha (IRDA Licence Number: 2710062)
Suzanne Laurent, 3rd March 20013
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