Misconceptions about who pays for long-term care have led many families down a dangerous path of poor and inadequate planning. One of the points of confusion is what the term long-term care means and who pays for it. Many people assume Medicare will take care of most long-term care needs, which is not the case. Let’s take a look at the reality of care as you age and why Medicaid, although a valuable resource, has some drawbacks.
What is long-term care exactly? It is estimated that over half of people turning 65 today will develop a disability where they need help with daily living activities. Most people assume that Medicare will pay for the help they need. Let’s take a closer look at what Medicare pays for and what the consumer must pay for out of pocket.
Many people think, especially when it comes to nursing home care, that they have the option of Medicaid to pay for a loved one. Medicaid is the primary payor source for nursing home care, but there are some critical factors to consider before relying on Medicaid to pay for care.
So, how to avoid Medicaid and pay for long-term care? One way is to start saving and save a lot while you are younger. For years, people have also purchased long-term care insurance policies, but many companies have gotten out of the business due to high payout costs. The more significant issue with these policies is what happens if you don’t use the benefit. Once you die, all of the premiums you have paid through the years are gone. Also, premiums for traditional long-term care policies have skyrocketed for many beneficiaries.
Many companies are now offering hybrid life insurance policies that include long-term care coverage to address these issues. These policies can be used to pay for long-term care costs, and when you die, they pay out a death benefit to your heirs. You can also lock in your premium payments, unlike traditional policies. The different types include linked benefit, long-term care rider on a life insurance policy and chronic illness or critical illness rider. An accelerated death benefit is a feature included in some life insurance policies that allows you to receive a tax-free advance on your life insurance death benefit while you are still alive. You may have to meet specific criteria to receive this benefit.
A stand-alone long-term care policy might still be the best option for some people, especially if purchased when you are younger. Meet with a financial professional to evaluate your options and pick the best plan.
Financial planning for care as you age and taking care of your health are the two best things you can do starting now. It is never too late to start. Relying on Medicaid may not be the preferred option. Consider your choices carefully by assuming that you will need some financial cushion as you get older, and you and your family will be happy you did.
Alliance America is an insurance and financial services company. Our financial professionals can assist you in maximizing your retirement resources and achieving your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling 833-219-6884 today.