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Planning ahead may help families afford long-term care amid inflation


Stan Horwitz and his family did not have any plans regarding long-term care until there was a crisis. His father, Martin, was in his late 80s and lived alone. He was reluctant to simply accept any assistance from his children.

Sooner or later, Stan and his sister found their dad unconscious in his lounge after a fall. This incident six years ago set off a cascade of medical issues. Martin was never in a position to return home. And when it got here to attempting to sort out his father’s funds, “the bureaucracy was intense,” Stan said. 

He said his father was diligent about putting money away, but the fee of nursing care worn out his life savings — $300,000 — in 4 years. Martin, now 93, qualifies for Medicaid, which pays for his expert nursing care. 

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The Horwitz family’s ordeal in paying for long-term care services shouldn’t be unusual — and high inflation will likely make the rising costs tougher for a lot of families to afford this care. 

Inflation has now replaced staffing as a top concern of expert nursing and senior housing facilities, in accordance with a recent survey, as small increases in essential operating expenses — food, supplies and energy — are making a huge impact and are not easy to chop.  

How much long-term care can cost

The typical 65-year-old has a 70% change of needing long-term care, in accordance with the U.S. Department of Health and Human Services. Yet, 1 in 10 of middle-income adults ages 44 to 64 should not have long-term care insurance, in accordance with a survey by Arctos Foundation and HCG Secure. And, many individuals aren’t aware that Medicare doesn’t cover costs related to long-term care services, which might include dressing and bathing. 

The prices can vary widely by sort of care and site. On average, long-term care costs $50,000 a 12 months at home and $100,000 in a nursing home, in accordance with LTCG, which provides services to the long-term care and life insurance industry. But in Connecticut, LTCG found nursing home care cost a median $165,000 a 12 months and, in Texas, just over $70,000. 

Traditional long-term care policies are expensive

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Few long-term care insurance policies have unlimited coverage. Costs vary widely and rely on age, gender, health and other risk-factors. For a recent policy with $165,000 profit, a healthy 55-year-old could pay $45,000 in premiums by the point they turn 85, in accordance with the American Association for Long-Term Care Insurance.

Tom Beauregard was an executive within the medical insurance industry when his parents were of their early 80s and dementia and pulmonary disease required them to have day by day care. 

“It was chaos, attempting to figure this out as a family,” said Beauregard, the founder and CEO of HCG Secure. “The true chaos got here into the decision-making process and the lack of expertise from my parents.” 

Understanding your options

That have prompted him to start out an organization to assist middle-income families understand their options. “You wish objective experts to enable you to understand make transition plans, how long you possibly can keep people at home safely, what form of services you possibly can herald,” Beauregard said. 

Low-income adults may qualify for Medicaid, but that requires a “lookback” which considers assets held within the last five years. Many others in middle- to upper-income demographics decide to self-fund long-term care, but experts say it could develop into tougher for older adults to administer the rising costs of those services. 

If people come to me for estate planning, they usually have not thought of long-term care, I make them take into consideration long-term care.

Evan Farr

elder law and estate-planning attorney

“It’s one thing to exit less or drive less when prices of food and gas are going up,” said Ken Latus, vp for long-term care products at Northwestern Mutual. “Cutting costs or finding trade-offs to your care as you age shouldn’t be as easy.

“Plan early so which you could stay in the driving force’s seat when the time comes,” Latus said. 

There are insurance options to assist offset the prices — from traditional long-term care insurance to hybrid policies that mix life insurance and long-term care coverage. These policies “provide funds that might be used to cover care expenses down the road, in addition to a death profit payable to the insured’s beneficiaries if care is not needed,” Latus said.

Also, investment growth or “money value” within the policy might be accessed throughout the insured’s lifetime and might be used to pay for long-term care services. And there are inflation riders that may increase advantages as much as 5% every 12 months. 

“If people come to me for estate planning, they usually have not thought of long-term care, I make them take into consideration long-term care, because in my mind these two areas of planning are inextricably intertwined,” said elder law and estate-planning attorney Evan Farr.

Crucial step, experts say, is to speak along with your family members about what chances are you’ll need and what you wish for care as you age.

Horwitz said he wishes he’d had conversations about long-term care much earlier together with his father — and he would have been more direct. “I’d say ‘Dad, we’d like to have a speak about your future and the way you’re planning’ — and ‘Dad, this happens to everyone.'”

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