Covering Long-Term Care Costs

Some of the major expenses you’ll need to anticipate in retirement are your healthcare costs. There are many choices to make when it comes to choosing a Medicare plan, using an HSA, and qualifying for Medicaid. One healthcare cost that is easy, but possibly detrimental to overlook is long-term care. It’s estimated that 52% of people turning 65 will need some type of long-term care during their lifetimes. On average, women will need 2.5 years of long-term care, and men will need 1.5 years. Also, 14% of people need long-term care for longer than five years. When you consider that the average rate for a private room in a nursing home is $100,375 a year, covering long-term care costs is a major feat.

Retirees may be confused about what services Medicare covers, but don’t fall for these long-term care myths. Medicare can cover medical services needed in nursing homes, assisted living facilities, and one’s own home, but not the cost of staying in these facilities or in-home care costs for long periods of time. Under most circumstances, it covers short-term stays in skilled nursing facilities if you were formally admitted to a hospital for three days. If qualifications are met, Medicare will pay the full cost for the first 20 days, and a portion of the cost for the following 80. After 100 days you are responsible for covering costs. Even if you purchase a Medicare supplemental insurance policy, you’ll need to find another way to cover long-term care costs.

Since Medicare won’t necessarily cover these costs, some people may look to Medicaid. And while Medicaid will cover a large portion of long-term care costs, there are strict functional and financial requirements to qualify for Medicaid. To start with, applicants must be 65 or older, and have a permanent disability or be blind. A medical specialist will assess applicants to see what type of care they require, and the criteria varies from state to state. The income limit to qualify for Medicaid also varies according to the state you’re in, and can be up to $2,313 per month as of 2019.

Covering long-term care costs is just one aspect of creating a retirement plan, but it is a big one. Whether you’re looking to pay for long-term care through Medicaid, insurance, your savings, or some combination, the professionals at Alpha 1 can assess your unique financial situation and help make long-term care planning a part of your retirement plan. Click here to schedule your free financial review today.