Planning for Long-Term Care: What You Need to Know
Planning for Long-Term Care: What You Need to Know
December 1, 2024
Many people mistakenly believe they’ll never need skilled nursing care or that Medicare will fully cover it. This misconception arises from confusion between Medicare (federal health insurance for those 65+) and Medicaid (a joint federal-state program for low-income individuals and the largest payer of long-term care).
Medicare and Long-Term Care
Medicare only covers skilled nursing care if:
- You’ve had a hospital stay of at least 3 days.
- You’re admitted to a Medicare-certified facility within 30 days for skilled care.
- Days 1–20: Medicare covers 100%
- Days 21–100: You pay up to $170.50/day; Medicare covers the rest.
- After Day 100: You’re responsible for 100% of costs.
Without planning, you may need to deplete retirement savings or sell your home to qualify for Medicaid.
Why Long-Term Care Planning Matters
By 2030, 70% of people will need long-term care services. A lack of preparation can:
- Impact your spouse’s financial security.
- Deplete your legacy for your children.
Early planning can help mitigate these risks.
Insurance Solutions for Long-Term Care
- Traditional Long-Term Care Insurance
- Low-cost coverage for 2–5 years.
- Optional inflation protection (3%–5%).
- Con: “Use it or lose it.”
- Hybrid or Asset-Based Solutions
- Combines permanent life insurance or annuities with long-term care coverage.
- Offers cash value, death benefits, or lifetime care options.
- Con: Higher premiums, often paid upfront.
- Life Insurance with Long-Term Care Riders
- Accelerates 2%–4% of the death benefit monthly for care needs.
- Pro: Addresses both life insurance and care needs.
- Con: May reduce the death benefit.
- Life Insurance with Chronic Illness Riders
- Provides care coverage through accelerated benefits or lien methods.
- Pro: No upfront costs for lien-based options.
- Con: Uncertainty around benefits until claim time.
Take Action Now
No single solution covers all long-term care costs, but even partial coverage (50%–80%) can greatly reduce the financial burden. Consult an insurance professional to explore options that align with your financial goals and needs.
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