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Financial
Focus
provided by Michael J Haynes
Edward Jones Investments
Act Now
to Defray Long-term
Care Costs
If
you're a baby boomer, then your biggest threat to
your future financial security may not be the
fluctuating stock market. It may not be the
solvency of Social Security, either. So, what then
is this danger? It's the high cost of long-term
care. And if you don't plan for these services well
before you need them, you could be jeopardizing
your financial independence during your retirement
years.
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below]
Of
course, you may never have to stay in a nursing
home, or require home health care services. But you
can't afford to ignore the possibility of needing
long-term care - especially when you consider these
facts:
- The average cost for a
year's stay in a nursing home is $50,000 per
year, according to the Health Insurance
Association of America - and it can reach twice
that amount in some major metropolitan
areas.
- Over the past several years,
nursing home costs have been rising five percent
or more per year, according to the American
Council of Life Insurers.
- One out of every three men
who live beyond 65 will require nursing-home
care, while one out of two women will need these
services, according to the American Council of
Life Insurers.
These
statistics point to one inescapable conclusion: You
need to protect yourself from the potentially
catastrophic costs of long-term care. If you rack
up hundreds of thousands of dollars in nursing home
bills, all your financial plans during retirement
may go up in smoke. And you could even cause your
grown children to assume a burden you'd never want
them to have.
What
can you do to prevent this from happening? First,
you need to be familiar with the funding sources
available for long-term care. Many people believe
that some federally-sponsored program, such as
Medicare or Medicaid, will pay for long-term care
costs. But that's just not the case. Medicare only
covers a small fraction of long-term care expenses,
while Medicaid won't help at all, unless you're
willing to "spend down" the vast majority of your
financial assets.
In
short, when it comes to paying for long-term care,
you're going to have to take matters into your own
hands. And that's why you should strongly consider
purchasing long-term care insurance from a private
insurer.
Not
all long-term care policies are the same, however.
So, before you buy, you'd better shop around. Look
for a company that has earned the highest safety
ratings from one of the major independent rating
agencies, such as A.M. Best Company, Standard &
Poor's, Duff & Phelps and Moody's Investors
Services. And look for a policy that, at the
minimum, has these features:
- Comprehensive coverage -
Make sure your policy pays for care in a nursing
home, assisted living facility or a private
home.
- Inflation protection - As
we've seen, nursing home costs are rising
sharply. So you'll want a policy that increases
its coverage to keep up with inflation.
- Waiver of premium - If your
policy has a "waiver of premium," you won't have
to pay additional premiums once you start
receiving benefits.
Here's
one final suggestion for buying a long-term care
policy: Don't wait too long. The younger you are
when you get your policy, the lower your premiums
will be. Long-term care premiums increase
particularly sharply between the ages of 60 and 70.
So,
act soon. You may never need to take your long-term
care policy out of your desk drawer - but you'll
probably be glad it's there.
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Stone
Creek Crossing
