Managing Medical Costs

Do You Have a Long-Term Care Funding Strategy?

What will be your biggest financial challenge in retirement? Will it be trying to protect your assets and avoid market risk? Or perhaps you’re worried about managing your spending so your funds last through your lifetime. Maybe you’re concerned about taxes or keeping up with inflation.

For many seniors, the biggest challenge may be long-term care. Long-term care is extended assistance with basic daily activities such as eating, bathing and mobility. It may include a medical component, such as administering drugs, or it could simply consist of help with day-to-day tasks.

Long-term care is often provided either in an assisted living facility or in the home by family members or home health aides. The U.S. Department of Health and Human Services estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care at some point. It’s usually needed for a few years, but nearly 20 percent of those who need care require it for more than five years.1

As you might expect, long-term care can be a significant financial challenge. If you don’t have a plan in place, you may struggle to get the care you need. Below are three strategies you can use to fund your future long-term care needs. A financial professional can help you develop and implement a plan.


Pay Out-of-Pocket

You always have the option to pay your long-term care costs out of pocket. However, doing so may be a drain on your retirement assets. It may infeasible altogether if you require care for several years, as many seniors do.

A recent Genworth study found that the average monthly cost for an assisted living facility is $3,750. In-home care isn’t much cheaper. The average monthly cost for an in-home aide is more than $4,000.2

Consider that you may need to pay those costs for years. It’s easy to see how it could be impractical or possibly even impossible to pay for long-term care out of your own assets. It may be wise to develop alternative funding strategies.


Rely on Government Programs

There are some government programs that offer assistance with long-term care costs. Medicare doesn’t cover long-term care. However, it may partially cover short-term stays in nursing facilities if the stay is related to a surgery or other medical procedure.

Medicaid will cover long-term care costs. To qualify for Medicare, however, you must have little income and few assets. You often have to spend most of your own assets before you can use Medicaid coverage. Also, you may have to move into a Medicaid-eligible facility.


Use Long-Term Care Insurance

Long-term care insurance may offer the most funding flexibility. You pay premiums to an insurance company and, in return, it pays for some or all of your long-term care costs when the need arises. The terms of the coverage depend on your specific policy.

Most policies cover care provided either in the home or in a facility. Some also cover home modifications for things like wheelchairs, lifts or safety equipment. In many ways, long-term care insurance can help you stay in your home rather than move into a facility.

Ready to develop your long-term care funding strategy? Let’s talk about it. Contact us today at Peak Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.





Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

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