Am I Prepared for Long-Term-Care Expenses?
January 23, 2013 
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Today, there is a great deal of attention that is being focused on the aging of the population. As the Baby Boomer generation begins to reach retirement age, people are starting to realize that there may come a time when they could need assistance due to declining health or ability.
Because of increased life expectancy, many people will live 20 or more years beyond their normal retirement age. Yet, while they may be living longer, this does not necessarily mean that they will be living healthier. Therefore, from a financial standpoint, it is imperative that people plan ahead not only for basic living expenses in retirement, but also for the high cost of long-term care.
There are three primary methods of insurance yourself for long-term care costs
Self-Insurance as an Option
To do this you must have sufficient income to pay the rising costs of long-term care. Keep in mind that even if you have sufficient resources to afford long-term care now, you may not be able to handle rising future costs without drastically altering your lifestyle.
The Medicaid Option
Medicaid is a joint federal and state program that covers medical bills for the needy. If you qualify, it may help pay for your long-term-care costs. Unfortunately, Medicaid is basically welfare. In order to qualify, you generally have to have few assets or will need to spend down your assets.
Your resident State law determines the allowable income and resource limits. If you have even one dollar of income or assets in excess of these limits, you may not be eligible for Medicaid.
It is critical that you meet with a tax planner and a retirement life solutions specialist to ensure that you follow the specific laws of your state in advance of expecting to file for Medicaid. Most states will look back 5-7 years on the assets you held and if you sold or transferred them during that time period, then they may elect to include them in your current asset valuation.
Long-Term-Care Insurance
A long-term-care insurance policy may enable you to transfer a portion of your liability of future long-term care costs to a long-term care policy issued by an insurance company in exchange for the regular premiums.
Most long-term-care insurance policies benefits may be used to help pay for skilled nursing home care, assisted care living facilities, continuing care retirement communities, in-home care, and adult day care. The main requirement is that you cannot perform 2 of the 6 Adult Daily Living skills (ADLs). These ADLS are bathing, mobility, dressing, transferring, toileting, eating, and the need for supervision. Insurance can help protect your family financially from the potentially devastating cost of a long-term disabling medical condition, chronic illness, or cognitive impairment.
A Recent Alternative
Long-Term-Care Riders on Life Insurance
Something new that most universal life insurance policies may now include is a long-term-care rider. These riders will provide a living benefit — usually a percentage of the face value — to help cover the cost of long-term care. By speaking with a Retirement Life Solutions Specialist, they can provide you with the full coverage of any of the policies you are investigating.
Source:
Life Insurance Think Tank. (2012) The Truth About Long-Term Care [White Paper] Retrieved from eSeries Here
