Long-term care costs continue to rise

Long-term care costs continue to rise whether care is for a nursing home, assisted living facility, home care or adult day care. The increases in cost reinforce the need for long-term care planning:  how you want to receive care and how you’ll pay for it.

According to the 2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs.

• Private room nursing home rates rose 3.3% to $219 per day or $79,935 per year.
• Assisted living costs also rose 3.3% on average to $3,131 per month.
• Home health care aides now cost an average of $21 per hour, a 5% increase;
• Adult day services run $67 per day, a 4.7% increase.

Many of us think that we’ll just get care at home which will be less expensive.  It all depends.  If you need assistance most of the day and night, then it is not less expensive than other alternatives.  But, home care is what most of us want, so at least use these hourly figures to help map out potential costs for long-term care.

 Then, you can look at buying long-term care insurance to cover those costs, you can look at self-funding and parcel off some of your assets into very safe investments so the money will be available when you need it, or you can hope you don’t need it and if you do deplete your retirement savings and then count on government programs.

Rates vary dramatically in different parts of the country, and even different parts of the state.  In Maryland, the average rate for a private room in a nursing home is $258; assisted living averages $3,873, a home health aide averages $20 per hour; a homemaker aide $18 per hour; and adult day services $75 per day.

So it is very important to plan based not only on where you live now, but the costs of the area you might be moving to in retirement.  

Remember, this is custodial care not medical care.  So don’t count on Medicare or your health insurance to pay the costs of care.

 Resources:

2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services and Home Care Costs.  

Interested in long-term care insurance quotes in Maryland contact lauraltc@gmail.com

Long-term Care Insurance Tax Benefits

 If you are planning on purchasing long-term care insurance, but haven’t yet, here’s one more reason to get your  long-term care policy before the end of the year – tax-benefits. But time is running out for 2009.  Since it can take weeks to get your application approved, you’ll have to apply soon to be able to benefit on your 2009 taxes.

 When you purchase a tax-qualified long-term care plan, you may benefit from a tax credit or deduction on your state income taxes.  About half of the states offer a benefit.  Check with your tax advisor or state revenue service for state specific information.

(Here are the rules for Maryland residents: The taxpayer is allowed a one-time credit against the state income tax in an amount equal to 100% of eligible LTCi premium paid. The credit may not exceed $500 for each insured, may not be claimed by more than one taxpayer with respect to the same individual and may not be claimed if the insured was covered by LTCi before July 1 2000. No carryover is allowed. For employers, a credit up to an amount equal to 5% of the costs incurred by the employer during the taxable year for providing LTCi as part of the benefit package. The credit may not exceed $5000 or $100 for each employee covered by LTCi under the benefit package.)

Depending on the amount of your medical expenses in 2009, you may find a federal tax benefit as well since tax-qualified LTCi premiums are considered a medical expense. For an individual who itemizes tax deductions, medical expenses are deductible to the extent that they exceed 7.5% of the individual’s Adjusted Gross Income (AGI). The amount of the LTCi premium treated as a medical expense is limited to the eligible LTCi premiums, as defined by Internal Revenue Code 213(d), based on the age of the insured individual. That portion of the LTCi premium that exceeds the eligible LTCi premium is not included as a medical expense.

 Here are the Federal tax limits for 2009 and 2010:

 2010 Federal Tax Deductible Limits

Taxpayer’s Age At End of Tax Year – Deductible Limit
40 or less	$  330
More than 40 but not more than 50	$  620
More than 50 but not more than 60	$1,230
More than 60 but not more than 70	$3,290
More than 70	$4,110

Source: IRS Revenue Procedure: 2009-50

 2009 Federal Tax Deductible Limits

Taxpayer’s Age At End of Tax Year – Deductible Limit
40 or less	$  320
More than 40 but not more than 50	$  600
More than 50 but not more than 60	$1,190
More than 60 but not more than 70	$3,180
More than 70	$3,980

Source: IRS Revenue Procedure: 2008-66

If you are self-employed you may be able to deduct 100% of your out-of-pocket long-term care insurance premiums up to the eligible amount without meeting the 7.5% AGI minimum.

 There is a good discussion of tax benefits of long-term care insurance at the American Association for Long-term Care Insurance.  

And always check with your tax advisor before making any tax-related decision.

Long-term Care Still an Issue

There is so much news about health care reform these days, the issue of long-term care gets lost in the shuffle.  But nothing has  reallychanged on this issue for most consumers. 

In fact, some of the cuts in Medicaid called for in the bill will reduce future benefits for the poor who count on Medicaid for long-term care.

I think this article from Kaiser Health News gives a good view of  what’s going on with long-term care.  We have some really big issues to resolve on health care for people of all ages.

Long-term care still sits on the shoulders of you and your family, unless you are impoverished.

Which Company To choose for Long-term Care Insurance?

If you are thinking about buying long-term care insurance, you’re probably thinking about using it years from now.  And that is the biggest reason to make sure you know that you are buying from a company that is:

1. financially strong.
2. experienced in the long-term care insurance market, and
3. committed to the long-term care business.

It is especially important in the current economic climate, as companies deal with the impact of the recession to their own bottom line.

The American Association for Long-term Care Insurance offers these tips on how to find out about the financial ratings of the insurance company you might be considering.  It’s also good to speak with an agent that represents a variety of companies so you can compare not only policy benefits and prices, but make sure you are getting a company that you feel comfortable will be there for you 20, 30 or 40 years from now.

This is good information to apply to looking at any type of insurance – life, auto/home, disability.  You buy insurance to cover costs when the ‘worst” happens.  You want to make sure the company is there for you and your family.

Long-term Care Insurance May Cost Less Than You Think

Long-term care insurance may be more affordable than you think.  Especially if you are in your 50s and healthy.

 A 55- year old can expect to pay $723-per-year for a base level of long-term care protection if they are married or $1,060 if they are single, according to the 2009 Long-term care Insurance Price Index.

 No doubt, it can cost more – but the point is that it doesn’t have to if you begin with a long-term plan.  That means thinking about such things as: how much of the cost you can pay on your own; where you will be living and the cost of care in that area; your family history and whether it includes a history of chronic conditions such as as Alzheimer’s, Parkinsons, MS, stroke etc.; whether you want care at home; what role your family can play or you want them to play in your care, to name a few of the issues.

Once you’ve thought through these questions you can be much more informed about the level of insurance coverage that makes sense and how “rich” a plan makes sense for you.  Watch out for agents who want to sell you a lot of “riders” –extras – they add to the cost and may not be necessary given your plan.

 But don’t wait until you get near retirement.  The younger and healthier you are, the lower the cost of the premium.  And yes you’ll potentially be paying for more years, but at a lower level and, if you have purchased inflation protection (which we highly recommend), the policy coverage is growing with you.

 Rates vary widely between companies so always compare rates from at least 3 companies. The American Association of Long-term Care Insurance said “What we did see is a far wider range of prices between insurers offering basically the same coverage.” Always ask about discounts.  And if you have a company plan and are health, check out individual policy rates too.  You may benefit from lower costs because you are healthy.

 Find out about Long-term care insurance rates in Maryland.

What’s It Like To Be in a Nursing Home?

Some medical students are finding out what it’s like.  As part of their training they spend two weeks in a nursing-home with a “diagnosis” of an impairment that would put them there. It’s New York Times article is worth a read because it addresses two very real issues:

•  How do we get more doctors interested in the practice of geriatrics to meet future needs of an aging population? In 2005, there was one geriatrician for every 5,000 people over 65, according to the American Geriatrics Society; by 2030 that ratio is expected to increase to one for every 8,000 patients. Geriatricians must participate in a two-year fellowship program after medical school to become certified, according to the NY Times article. 
• Can these experiences help doctors better understand how to respond to the elderly – not just their medical needs, but emotional as well?  Same for those of us who visit friends or family in nursing homes

 It’s a fascinating –but brief – look inside an experience many of us fear. It’s also a good reminder about the importance of long-term care planning (your preferences for where and how you’ll be cared for) and funding that care, whether it’s your own resources, long-term care insurance or friends and family.

Aging at Home Safely

Whether staying at home as you age is a preference or a necessity, chances are there are some modifications that will need to be made.  If you are caring for an aging parent, you may want to get some help from an aging at home expert who will do a home assessment and recommendations for changes.

 Or if you are a do-it yourselfer there are several easy checklists.  AARP has a home safety checklist which can be a good start.  But if your loved one needs more assistance, consider bringing in a geriatric care manager who can assess their needs and recommendations for modifications and local  resources.

http://www.aarp.org/makeadifference/volunteer/create_the_good/Home_Safety.html/?cmp=NLC-WBLTR-CTRL-71709-F5a

The New York Times article here includes ideas about how to find aging in place resources but also how to pay for the modifications.

 Some of the more recent long-term care policies include limited funds for “home support services.”  So if your loved one has a policy and is qualified to receive benefits (usually assistance with two activities of daily living), call your insurance provider to find out if funds are available.

 If the modifications are low cost enough, then you might just be able to wait out the housing market.  But, the most important thing is to make sure that the home is safe.

Caregivers Share Stories of Caregiving and Long-term Care

A few nights ago I was sharing war stories of long-distance caregiving.  We both agree that the worst part was the guilt – when you weren’t there you worried and felt terrible you weren’t doing more when you were there, you felt terrible you had been away and now couldn’t do more.  Any woman who has been a caregiver, revels in sharing with others – to learn and also, just to feel like you’re not alone. 

 So, I’m intrigued by an invitation I received to join a Twittercast on caregiving July 13.  You should join in too if you are a caregiver.

Caregiving is a huge part of women’s lives, and so often it’s a job for which we usually don’t get or expect monetary compensation. How can caregiving be made easier to make our lives easier?  and if you don’t think you need to plan for long-term care, or haven’t yet experienced the ups and downs of being a caregiver, you just might want to “listen” in. 

Over the next couple of weeks, Fem2.0 is partnering with the National Family Caregivers Association and the Christopher and Dana Reeve Foundation to start a fresh discussion about caregiving and women.

    What is caregiving in all its shapes and forms?
    What role does it play in women’s lives?
    What can be done, or what changes need to happen, to facilitate caregiving?

We are looking for insights, comments, and expertise. We are looking for personal stories to illustrate the human experience of caregiving and to build a sense of solidarity among all caregivers.

Want to join in?  Here’s how.      Participate in the Women and Caregiving Twittercast Monday night, July 13, 10 PM EST — hashtag #fem2. Find out how to join a Twittercast here: http://www.fem2pt0.com/2009/02/13/easiest-way-to-participate-in-fem20-twittercasts/

Long-term care included in health reform bill

Here’s a good article on long-term care, what’s going on in Congress, and what to look for in a long-term care insurance policy.

The health care reform bill does include a provision for long-term care.  It’s a government program with payments taken out of your paycheck — $65 per month.  You would automatically be enrolled, though have the option to opt-out.  Benefits for care $50=$100 per day after you have paid into the program for at least five years.  The program would start in 2012.  Lots of steps to go before it happens– if it happens.

It is good to see the recognition of the long-term care cost issues.  This won’t help those already retired or near retirement.  but for younger people it might help –we’ll see.

Costs of Retiree Health Continue to Climb

There’s not much relief in sight for the cost of health care for those thinking about retirement.  Costs are about 9% higher than a year ago for men and married couples and 16% higher for single women, according to new research from EBRI (Employee Research Benefit Institute).

 The estimates can help future retirees and current retirees deal with the financial consequences of longevity and investment risk, as well as the various type of medical care coverage available when they reach age 65. 

The numbers take your breath away.  And, they don’t include costs for long-term care. And they are estimates for today’s 65-year old.  got ten years until retirement, costs will likely be higher.

 Looking at the situation that most of us are likely to face – Medicare with individually purchased supplemental insurance- here’s what EBRI predicts you need in savings at age 65 to cover health care costs in retirement.  These numbers project costs if you have average prescription drug usage; use lots of prescription drugs, your costs will be higher. 

Man:  $86,000 in savings to have a 50% chance of having enough money to cover health care costs; $177,000 for a 90% chance to cover costs. 

Woman:  $125,000 for a 50% chance of having enough money to cover health care costs; $221,000 to a 90% chance of having enough money. The costs are higher because women generally live longer.

 Married couple:  $210,000 to have a 50% chance of having enough money for retirement health care costs; $338,000 for a 90% chance. 

If you have retiree health insurance benefits, check here for estimates that appear in the June 2009 EBRI Notes. There are also numbers for someone who is planning to retire in 2019.  If you’re a planner, this is great information to plug into your financial plan.  It might influence your decision about when to retire.

 Long-term care costs, not included in these figures, can top $74,000 per year (rates vary widely across the country) according to the 2009 Genworth Cost of Care Survey.  That assumes nursing home care, so at home care or assisted living may be less but can still be $3000 or more per month and is generally not covered by Medicare or health insurance.

 This is important information if you are close to retirement, in retirement or just planning on how much you need to retire.  The health care reform legislation is focused primarily on under 65.  While changes are expected to be made in Medicare, there is little evidence that costs will go down.  And if you think not purchasing a Medicare supplement plan is a way to cut costs, remember that leaves you paying about 20% of your medical and hospital bills.   

Health care costs continue to be one of the biggest expenses retirees face.  Plan for them; don’t just hope for the best.