As I discussed in the first part of this post, long-term care is something that we all have to take seriously and plan for accordingly. Though Medicare can be a great help, there are shortcomings that you will have to work around to deal with prolonged medical care. There are going to be expenses that your Medicare won’t cover, and long-term care is only covered for a short period. While I recommend finding a qualified fiduciary to help with your specific plan, let me outline the basic options you have.
The most basic option you have is arguably the most difficult- you can pay out of pocket. This circumvents dealing with insurance claims or worrying whether or not you are covered but it requires you have enough wealth to cover the costs. If you think you can pay out of pocket, make sure to talk to an advisor and your family about how much money you are willing to spend. These bills can be very high and you can decimate your savings. This is really just an option for the very wealthy or those with no other option. Should you run out of money, you may be capable of getting Medicaid from the government but this means you lose agency in where and how you will receive care.
If this is unfeasible, you can think about getting long-term care insurance. This can mitigate your risk by passing the possible expenses onto your insurance companies. However, it’s important to note that while the price of these premiums is reasonable in your fifties, they go up exponentially for sixty and seventy-year-olds. Today, there are only a handful of companies that still offer these policies.
Some life insurance companies provide an option attached to a policy that is designed to help you cover long-term care. This works just like a normal life insurance policy except if you require long-term medical attention, there is a provision that will mitigate the financial burden. Also, should you buy this policy and not need it after a certain number of years, you’ll have ownership over the cash value. You can also purchase annuities from insurance companies that act in a similar way. You get to keep the money if you don’t need the care but with the added benefit that the annuity brings.
While it is never too early to start thinking about these issues, I typically start talking to clients about long-term care in their fifties. If you aren’t sure about which avenue is best for you or if you would benefit from a hybrid of some of these, talk to a professional to figure out what fits best for your financial situation. For more information, see my video on the subject: