While the only sure things in life are death and taxes, it’s worrying about the quality of life that can really be a buzzkill.
Roughly 70 percent of Americans over 65 will need some form long-term care at some point in their lives, according to a study by the U.S. Department of Health and Human Services.
Once you hit 65, you have a 35 percent chance of entering a nursing home with a 20% chance that you’ll have to stay there for five years.
With statistics like these, it’s no wonder that the idea of purchasing long-term care insurance keeps popping up. Unfortunately, if you don’t purchase coverage when you’re in your 50s, it may be too expensive to buy once you’re in your late 60s or early 70s. And if you suffer from certain illnesses, the truth is that long-term care insurance coverage may not be available to you.
The first hurdle is getting past the hype so that you can evaluate whether you need coverage — not everyone does. Here are seven commonly held myths about long-term care.
Myth #1: I don’t need it.
The fact is, the vast majority of Americans will need some sort of long-term care services as they age, particularly help with Activities of Daily Living (ADLs), including getting in and out of bed, walking, bathing, dressing, and eating.
Even if you’re healthy, the aging process unfortunately includes a natural decline in eyesight, hearing, balance and mobility.
Myth #2: Long-term planning is the same as long-term care insurance.
It’s easy to confuse “long-term care planning” with long-term care insurance, but they’re not the same. In fact, making that mistake could literally send you into bankruptcy in your senior years.
Long-term care planning means developing a personal strategy and making decisions now about how you want a range of things to be handled when you or a loved one needs long-term care services down the line.
Insurance is just one of many options people consider for covering the costs of long-term care. If you buy an insurance policy but don’t plan appropriately, your care could be compromised. If you develop a plan but never buy the appropriate insurance coverage or execute an advanced care directive, living will, and powers of attorney for health care and financial matters, you could wind up leaving all of your care decisions to others without the means to pay for them.
Myth #3: I’ve missed the planning window, so why bother?
There’s no telling when you’ll need your fully-realized long-term care plan to kick in, so the sooner you plan the better off you’ll be.
If you’re over 50, the best time to plan is now. It will make you a more informed consumer of long-term care services and will help you stay in control of tough decisions.
Myth #4: If I can make it to age 65, Medicare, Medicaid or other government programs will pick up the tab.
Nothing could be farther from the truth. Medicare does not cover the custodial services that help with ADLs. It will cover rehabilitation, home health care and durable medical equipment as long as they’re deemed “medically necessary.”
Medicaid may pay for your long-term care, but you need to meet strict eligibility requirements, which differ by state and often involve extensive documentation of assets. And don’t think you can simply transfer all of your funds to your heirs and then apply. There’s a five year “look back” rule that will require you to document where all of your money has gone.
Myth #5: Why save? No one knows how much long-term care will cost.
Have you priced long-term care costs lately? They’re expensive, and even with long-term care insurance, you’ll be responsible for paying for some or all of the care you need.
Go to http://longtermcare.gov/costs-how-to-pay/costs-of-care-in-your-state/ to estimate what your costs could be. Then, think about the different ways you’ll be able to meet that cost, either through an insurance policy, annuity, reverse mortgage, savings, pension benefits, social security benefits, or other personal income.
Myth #6: My family will take care of me.
Have you tried to be a 24/7 caregiver? It’s pretty hard work, even for a devoted family member who loves you. No one person can be there for you every hour of every day and provide all of the care you’ll need.
As part of your long-term care strategy, look into caregiving services in your area, including in-home providers, elder daycare centers, elder shuttles, meals on wheels, and other low-cost services offered in your area.
Managing a rotation of 24/7 caregivers is itself nearly a full-time job. You’ll want your unpaid family members to spend their energy helping you manage your way through your need for assistance rather than resenting your lack of planning.
Myth #7: Where I live now is the best place for me to age.
Really? What does your home look like?
Stairs, narrow doors, steps in odd places, low bathtubs, showers without handholds are the kinds of architectural obstacles that won’t work if you have limited mobility or failing eyesight. And living alone won’t help if you slip and fall and no one checks on you regularly.
At some point in time, living in a community or facility may make sense, and as part of your long-term plan, you’ll want to consider it sooner rather than later.
By Ron Allen, MSFS, CAP™, AEP, CFP®, a certified Financial Planner Pracitioner dedicated to educating consumers in personal financial planning.