“Planning is bringing the future into the present so that you can do something about it now.”
– Alan Lakein, American author and Time Management Expert
Good news … people are living longer. The Census Bureau reports that the population age 65 and over is projected to more than double to 98.2 million in 2060. While we are living longer, this also means that the likelihood of becoming disabled or dealing with health challenges will increase. Of course, no one likes to think about becoming disabled or having declining health, especially when you are healthy and living in the moment. However, study after study confirms that nearly everyone will face at least a temporary disability sometime during their lifetime.
Unfortunately, for many, their disability will not be short-lived. The Department of Health and Human Services estimates that by 2020, 12 million Americans over age 65 will need long-term care.
Planning for Long-Term Care
Despite the statistics about the risk of becoming disabled, most people are unprepared for the costs associated with long-term care. According to a 2015 Genworth Cost of Care Survey, only one-third of adults were “very or extremely confident” in their ability to pay for long-term care. While many individuals reported being concerned over leaving family with debt or becoming a burden on loved ones, two-thirds of Americans over the age of 40 reported doing no planning for long-term care.
Cost of Long-Term Care
So if you became disabled, how would you pay for your long-term care? The actual costs for long-term care are staggering. Many seniors are confused about the coverage for long term care by Medicare, Medicaid and long-term care insurance.
Medicare
The truth is that Medicare does not pay for ongoing long-term care (although it will pay for intermittent stays at nursing facilities). Medicare does not cover skilled nursing home costs beyond 100 days, subject to co-insurance requirements and it does not cover custodial nursing home care or non-skilled home health care (i.e. bathing, toileting, grooming, and dressing). Many seniors and their family are always surprised to find out that Medicare does not pay for long-term care.
Self-Pay
Another possible way to finance the costs of long-term care is to self-pay. However, privately paying for long-term care costs is typically not an option for many seniors and their families due to the overwhelming costs.
According to the 2018 Genworth Cost of Care Survey, the monthly cost for a semi-private nursing room in the New York City area, is $12,091, while the monthly cost of a private nursing room is $12,927. The survey showed that nursing home costs had increased in 2018 by 3 percent from 2017. See, Genworth’s Cost of Care survey.
Many seniors and their families who we meet, want to avoid going to a nursing home, unless it is absolutely necessary. If you are considering remaining in your home, but require home care services, the hourly rate for the services of a home health aide in the New York City area is $25/hour, and the cost of adult day care, which provides support services in a protective setting during part of the day, is $90/day. These costs are less expensive than nursing home care, but can still add up when you have to self-pay for care.
Long-term Care Insurance
Long-term care insurance can be a useful tool for seniors. Since many seniors and their families are not aware of the limited long-term care coverage available through Medicare, they may not know about long-term care insurance as an alternative way to pay for long-term care in the home, nursing home, or an assisted living facility. Like most insurance, long-term care insurance can be expensive. However, if you are in good health and can afford it, long-term care insurance should be considered.
Medicaid
Unlike Medicare, Medicaid is a government program which pays medical costs and long-term care costs. Medicaid is the payor of last resort. It is available to individuals or households of limited means. In order to qualify you must meet strict financial and other eligibility requirements and the rules governing Medicaid are complex. In New York State, the income and resource guidelines vary depending on whether you are applying for community (home care) Medicaid or institutionalized Medicaid. Therefore, before you apply for Medicaid, it is best to speak with an experienced attorney to learn more about the rules and process.
Although not a popular topic, long-term care is an important one. It is always a good time to plan for the aging process. At the Samuels Law Firm, we are in the business of providing options to you or a loved one when it comes to your potential long-term care needs. If you, need help figuring out your options, contact us to schedule a planning session.