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Posted on 15. November 2018

Assessing Your Loved One’s Long-Term Care Needs and the Potential Costs

By Beverly Nelson

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About two out of every three people over age 65 years will need some sort of long-term care. Whether that comes in the form of a nursing home stay, a room in an assisted living community, in-home nursing or modifications to an existing home, the care can get costly. If you have a loved one who is at risk of needing long-term care, you should take some important steps to plan and pay for that care before the need arises.

Is My Loved One at Risk?

Sometimes, accidents happen or illnesses spring up suddenly, and your loved one needs long-term care immediately. Unfortunately, it's hard to plan for that. However, in all other cases, there are ways to predict whether your loved one will, at some point, need long-term care. Here are some major risk factors to consider:

  • Currently has a disability
  • Has a mental condition that typically declines with age
  • Has a strong family history of any ailment (but especially dementia/Alzheimer's)
  • Is obese
  • Smokes or drinks heavily
  • Is female
  • Doesn't have a lot of family support
  • Suffers from a chronic condition already (diabetes, high blood pressure, etc.)
  • Has had major surgery like a hip replacement, heart surgery, etc.

If you feel like your loved one is at higher risk for needing long-term care, it's imperative that you begin to think about covering the costs ASAP.

Where Do I Find Funding?

In an ideal world, your loved one will have already saved enough money to cover any future long-term care needs. Of course, we don't live in that ideal world, and the stats aren't promising. As Redfin explains, "The average annual cost of assisted living amounts to a little more than $45,000, and more than $58,000 for specialized memory care for seniors with Alzheimer's or other forms of dementia." On top of that, the average person who needs long-term care pays around $25,000 out of pocket.

Nearly half of people think that Medicare will pay for some or all of their long-term care, but that's simply not the case. While Medicare will cover medically necessary, short-term care, long-term care is rarely covered. And, the average length of a long-term care patient's care? Nearly three years. This is why it's vital you start thinking about supplemental methods of funding.

  • Sell their life insurance policy. If your loved one is over 65 years old and has a $50,000-plus universal, whole or convertible term policy, he or she may be able to sell it to a third party in a move known as a life settlement. This comes with some risks, obviously, but it can provide immediate cash to cover long-term care and other medical expenses.
  • Open up a health savings account for them. If your loved one qualifies, you can contribute nearly $3,500 per year to this tax-advantaged savings account used to cover medical expenses. Any money in the account not used up by year's end will roll over.
  • Don't forget about Medicaid. While Medicare isn't a lot of help in this scenario, Medicaid can be. Medicaid does have income and asset qualifications, but your loved one doesn't have to be completely indigent to qualify. He or she will have to qualify for his or her "eligibility group," and that's done on a state-by-state basis.
  • Consider long-term care insurance if you can. You're probably going to have a hard time getting long-term care insurance for your loved one once he or she has gotten to the point where it's needed, but if you see that your loved one will likely need care in the future, a long-term care insurance policy could be a solid idea. Another option is to add a long-term care rider to your current health policy, if they allow it.

Not all seniors will need long-term care, but the stats say the majority will, especially if they are older. You can't count on Medicare, Social Security or any other senior income to cover the full costs of long-term care (they're just too expensive). The earlier you begin to plan for this probable situation, the easier it will be when the time inevitably arrives.

Beverly Nelson is the creator of StandUpForCaregivers.org, which aims to help protect and advocate for the health and well-being of adult caregivers.

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