Dan Nicholas, CLU, CLTC         Long Term Care Planner

By now you know that Medicare and health insurance at work doesn't cover extended chronic care.  So what are the costs? What are the risks?  If the costs are small and the risks small, to self insure looks good.  Or maybe just "wing it"?

Costs: As a planner, I like help clients key on 70% of Skilled Nursing Home (SNF) costs in their county and state.  In the Bay Area in 2010, that's about $160 a day for two, three or four years...a great start.  Will $160 a day cover all LTC costs?  Of course not.  But an LTCi plan as modest as $80 a day for two years can be an absolute life saver for many families. Yes, a lifetime LTCi plan providing $220 a day for Skilled Care with 5% compound inflation would be nice...and a plan for four years would be nice, too.  But how many of us can afford such a plan?  And, remember, only 13% of nursing home claims go over 3 yrs.  My clients make up middle America and I believe "half of something is better than all of nothing"--a very good place to start!  As a planner, I favor LTCi strategies that are reimbursement, yes, but also have some cash in them.  Let's meet and I'll tell you how and why. Long Term Care insurance (LTCi) Individual Plans (most often not available at work) come in four flavors and we can explore which one might work best for you.:

a) Reimbursement

b) Cash Hybrid

c) All Cash

d) One Pay Asset Transfer

And, of course, if we are talking about your parents who are beyond health, age and financial ability, planning takes a different path.  But we can still plan.  Email me.  I can help.

Cost of Care in your town?

• In-home Care in the Monterey Bay area: $21 hour, min. 4 hrs of care per day.  $160 a day will pay for about 4 hrs in the morning plus 3-4 hrs. in the evening, every day.  Care often starts every other day. So, yes, you can often "stretch" your 2yr policy to last 3 years.
  
• Assisted Living...$5-8k mo.
• Skilled Nursing Home care--$220 a day or $7,000 a month
  

Is $160 daily benefit enough?  Of course not.  But why look at $220 a day in LTCi coverage at a nursing home level if you

a) never want to go there and,

b) such a plan could be way expensive.

• $160 for 2 or 3 years might be a good place to start!  Click here to see the Genworth Cost of Care Study for costs in your zip code/county/state.  If you plan to retire in Boston because your kids live there, you'll need 2x the amount over Santa Cruz.  If you age in place in New Orleans? It's about half.
• What my clients have told me about their local care costs, what they or their parents have paid, not having an LTC plan in place before an event happens.
• Maybe you can self insure?  Click here to go to the Fed calculator for "the realities of paying for LTC costs your self". This is a federal gov't. web site to calculate your costs to self insure for this risk. Suggestion: put in $80k yr. for 2.1 years if single: $200k; 2x that if married; use 81 for age when care starts; use 5% for your "side fund" growth.  The www.ltcfed.com calculator will tell you how much you need to put aside each month to self insure for this risk.
• Kiplinger's article: The Cost of Alzheimer's Disease by Susan Garland (cost to families), Nov. 4, 2010

Did you know:

• 1/5th of  LTCi plans written today are shared plans with spouses?  Ask me how.
• 50% of claims today on newer, better LTCi policies are "informal claims", paying for-example: your grandkids to chip in and help while they attend junior college nearby!
• 75% of claims today are for in-home care!  Some 15 years ago you couldn't even obtain this kind of coverage, as LTCi was designed then only for nursing home "anti-impoverishment" coverage.

Click here for a quote on a comprehensive plan that will pre pay for

a) in home care

b) assisted living care

c) adult day care

d) skilled nursing home care...should an LTC event happen to you.

"Experts predict that by 2030 Medicare spending on those with Alzheimer's will cost nearly $400 billion."

We are perhaps in denial about dementia and aging.  I'm 62.  At 65 if I have my wife and five friends to dinner around the table at my house, one of us has dementia.  Go to www.alz.org and study this.  It's a wake up bell ringer.

The emotional cost to families and caregivers of those with Alzheimer's can be hard to even imagine. One in seven over age 65 have dementia in the US today.