The importance of planning to finance nursing home care

Posted on behalf of Stewart Bell, PLLC on Jul 11, 2012 in Nursing Home Information

The prospect of retirement raises a number of anxiety-inducing questions for many West Virginia residents. "What if I outlive my assets?" "What if the market takes another turn for the worse?" "What if inflation erodes the value of my retirement savings?" Even though each of these questions raises a legitimate concern, the biggest single threat to an otherwise sound financial future in retirement is health care.

Current estimates suggest that about 70 percent of Americans aged 65 or older will need to receive extended medical care at some point during the remainder of their lives. Although the enormous cost of receiving this type of care at home or in nursing care facilities has been widely publicized, few people actually plan for it, which can be disastrous financially and severely limit a person's options when it comes to choosing a nursing home facility.

Apart from personal savings, there are three main ways to pay for long-term care expenses: Medicare, Medicaid and private long-term care insurance.

Contrary to popular belief, Medicare doesn't really provide a generous amount of benefits for long-term care. It will provide limited benefits for a stay of up to 100 days in a qualified nursing home facility but only after a hospital stay.

The second option, Medicaid, will cover the cost of long-term care provided you're earning little or no income and have few financial resources or assets (including retirement funds). If your assets exceed the limits, they will have to be liquidated (meaning you lose them).

The third and best way to protect your financial security in retirement is to purchase a long-term care insurance policy from a private insurer. The earlier you do this in life, the better. As you age, insurance policy options may become limited or even unavailable to you; policy premiums (which aren't cheap to begin with) increase dramatically as well.

The bottom line: Don't wait. Ask your insurance agent, financial advisor or attorney about planning for the possibility that you may need long-term care in a nursing home facility at some point during your retirement.

Source: U.S. News & World Report, "How Nursing Home Stays Ravage Finances," June 15, 2012

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