There are many ways to pay for the long term care expenses that may be in your future. You can pay for these costs from your investments, savings, retirement plans or you can have a Long Term Care insurance policy. In this blog, today, we will explore the various forms of insurance policies available to assist in paying for long term care, (LTC).
There are many levels of LTC that are designed to cover the care that you may need. There is assisted living, home health care, board & care facilities, skilled nursing and convalescent care. Each one of these types of care offer a treatment plan that meets the level of care you need.
Assisted Living refers to a facility that offers residents a private apartment or room that serves as their home base with all meals and activities held in a central location. This type of care is designed for the truly independent resident who does not need assistance to perform their “activities of daily living.”
Board & Care or Skilled Nursing Facilities are for those who need additional assistance due to medical or physical issues.
Home Health Care is designed for those who want to remain in their home as long as possible and may need the same care that is provided in a board & care or skilled nursing facility but choose to pay extra to receive that care at home.
In Southern California today the average cost of home health care is approx. $20 per hour. Cost for facility care ranges from $75.00 to $230.00 per day and can cost as much as $300.00 to $400.00 per day depending on location, care needs and facility type.
So how do you prepare for this? If you are a husband and wife planning for this care, one may be healthy and the other not so healthy. So that means that your normal cost of living may be greatly impacted by the need to pay for these increased services and costs for one while the other remains healthy.
This can destroy a retirement plan, investments or savings in a very short period of time. Long Term Care Insurance is one way to “discount” these costs. Depending on when you secure coverage, and it is done correctly by an accredited professional, you could pay a fraction of the real cost through the miracle of discounted dollars. By paying premiums for a long term care insurance policy you effectively “pre-pay” the cost of long term care. In addition to pre-paying you also insure one very important option, the option of choice. You get to choose where you go, and where you stay. You, and your family, choose the location or home based on the cost that the policy will pay. This is a very important difference between private and public assistance with these costs.
There are several ways to purchase long term care insurance today. You can look at the traditional way of buying a specific LTC policy or you can look at certain life insurance policies and annuities that offer LTC options built into the benefits. The advantage of any of the above policies is by insuring for LTC you can pre-pay these costs with discounted dollars and remove the stress of “what if?”
Please feel free to contact us about the tax advantages, options and security that owning a policy can bring.
Kenneth Scopp, CFP, CSA, CLTC.