If you’re in your 60s, you’re probably looking forward to retirement and thinking about all of the wonderful things you’re going to do when you don’t have to work any more. But, while you’re planning all the fun ways you’ll spend your time (and money), you may also want to add buying long-term care insurance to your to-do list.
If you don’t have this type of coverage — or some other plan to pay for nursing home care in case you need it — you could end up emptying your bank account. Here’s why long-term care insurance could be a crucial purchase at this time in your life.
There’s a very real chance you’ll need nursing home care that won’t be paid for
If you’re trying to decide whether buying long-term care insurance is worth it, there’s one frightening statistic you need to know. Someone who is turning 65 today has a 70% chance of needing some kind of long-term care over the rest of their lifetime. On average, people end up needing this kind of care for around three years.
That’s a huge problem if you don’t have a plan to pay for this. The monthly median cost of a semi-private room in a nursing home is around $8,669 a month or $104,028 a year. Even if you have a pretty big brokerage account balance, bills like this will drain it quickly.
Now, you may be wondering why you’d have to pay for it. The reason is because Medicare and most private insurers only pay for inpatient nursing care under very specific circumstances such as when you need rehabilitation after an in-patient hospital stay. Most people go into nursing homes (or need home care) called custodial care because they need assistance with routine activities of daily living. This isn’t covered at all.
Long-term care insurance can be one of your best options for covering these costs
If you don’t want to deplete all you’ve worked for all your life, buying long-term care insurance helps ensure you don’t have to. A long-term care policy can cover some or all of the costs of a nursing home, allowing you to leave your money for a spouse or for your kids.
Long-term care policies get more expensive as you get older, so the best time for most people to purchase them is in their 50s or 60s. You’ll want to read and understand policy terms carefully, though, and shop around for the best plan to make sure it pays a reasonable daily rate for a nursing home and that you can get this care covered in most circumstances without having to jump through a ton of hoops.
Other options exist, such as working with a lawyer to find a way to protect assets and qualify for means-tested Medicaid (which covers nursing home care). But these estate-planning techniques won’t work for everyone and they can be more complicated than simply buying a long-term care policy.
So, while it may be worth a phone call to an estate-planning attorney to learn whether making a Medicaid plan is worth it for you, unless you have pretty substantial assets, you may want to start shopping around for long-term care coverage before it’s too late.
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