When drafting a comprehensive estate plan, people may overlook the cost of long-term medical care. Medical advancements will allow the Baby Boomer generation to live 20 to 30 years after retirement age, but probably not without complications. About 70% of those over age 65 will need long-term medical care.
A 2016 survey revealed that a private room at a nursing home could cost up to $8,000 monthly and that an in-home nurse could cost as much as $4,000 every month. Seniors can cover these expenses, but at what cost?
What does long-term health care cost?
In 2020, people can expect to pay even more for personalized care. Though expensive, people who prioritize planning and preparation can cover these unfortunate costs. People pay for long-term care in several ways:
- Medicare: Medicare helps with immediate medical problems and can include nursing home care or even hospice. Medicare’s terms offer only limited coverage, so benefits will not last long.
- Medicaid: This government health care program helps low-income individuals receive the care they need. To receive benefits, retirees must reduce the value of their estate, lowering their income and qualifying. Lawyers can help by liquidating assets or using the equity in the family home. Relying on Medicaid will reduce an estate significantly, impacting inheritances and the ownership of family assets.
- Long-term health insurance: Long-term health insurance works like any insurance policy, but many states no longer offer this product. Interest rates make these policies incredibly expensive and benefits only pay under certain conditions. If a person is too healthy, the insurance company may keep everything.
- “Living benefits” insurance: These policies combine life and long-term care insurance policies into one. If a person needs funding, they take what they need from the policy. The leftover funds go to one’s heirs with a life insurance benefit.
- Asset-based insurance: These policies operate off a lump-sum payment. The insurance policy pays benefits determined by the age a person began making payments. Policyholders have options to get their money back, or the policy can pay out a death benefit to heirs.
A lawyer can provide answers
Those with questions about long-term health care and how to include it in their estate plan can reach out to a local lawyer familiar with estate planning. An attorney can help draft estate planning documents, work with insurance companies and help administer an estate.