How much does eldercare cost, and how do you arrange it when it is needed?
The average person might have difficulty answering those two questions, for the answers are not widely known. For clarification, here are some facts to dispel some myths.
True or false: Medicare will pay for your mom or dad’s nursing home care
FALSE. Medicare is not long-term care insurance.1
Medicare Part A will pay the bill for up to 20 days of skilled nursing facility (SNF) care, but after that, you or your parents may have to cover some costs out-of-pocket. After 100 days in a SNF, you will have to cover all costs out of pocket. The only way to “reset the clock” for Medicare coverage of these services is if the patient can somehow go without skilled nursing care for 30 or 60 days or if they require a hospital stay of three full days or longer.1
True or false: A semi-private room in a skilled nursing facility costs about $35,000 a year
FALSE. The median cost of a semi-private room is now $89,297. A private room in an assisted living facility has a median annual cost of $100,375 annually. A home health aide could run you up to $4385 per month for full-time care. Even if you just need someone to help mom or dad with activities of daily living (ADLs), such as eating, bathing, or getting dressed, the median hourly expense is not cheap: non-medical home aides run about $23 per hour, which at 10 hours a week, means nearly $12,000 a year.2,3
True or false: Only around 40% of Americans aged 65 and older are expected to need long-term care
FALSE. Someone turning 65 today has a 70% chance of needing long-term care. That means that by 2030, it’s estimated that around 24 million Americans will need long-term care. This is double the current number already receiving care.4,5
True or false: The earlier you buy long-term care insurance, the more manageable the premiums
TRUE. Younger policyholders may pay lower premiums.
The best time to consider long-term care insurance is when you are healthy. While you may be paying a premium for a longer amount of time, the expense may pale in comparison to paying for unexpected medical costs out of pocket.6
True or false: Medicaid can pay nursing home costs
TRUE.The question is, do you really want that to happen? While Medicaid rules vary by state, in most instances, a person may only qualify for Medicaid if they have no more than $2,000 in “countable” assets ($3,000 for a couple). A homeowner can even be disqualified from Medicaid for having too much home equity. A primary residence, a primary motor vehicle, personal property, and household items, burial funds of less than $1,500, and tiny life insurance policies (with face values of less than $1,500) are not countable. So, yes, under these economic circumstances, Medicaid may end up paying long-term care expenses.7
A little strategizing now could make a big difference in the years to come
If you’re concerned about the potential costs of long-term care, a financial advisor can help you learn more about ways to pay for long-term care and discuss your choices.
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Joelle Spear is a financial advisor and Partner located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. She offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. She can be reached at 508.598.1082 or jspear@canbyfinancial.com.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.
1Medicare.gov, March 26, 2020
2SeniorLiving.org, June 24, 2020
3APlaceForMom.com, May 11, 2020
4AmericanActionForum.org, February 18, 2020
5LongTermCare.gov, July 23, 2020
6Forbes.com, April 17, 2020
7LongTermCare.ACL.gov, July 23, 2020