HOW TO PAY FOR HOMECARE WHEN LONG TERM CARE INSURANCE IS NOT AN OPTION

Was your New Year’s resolution to finally make that giant step forward and ask for help at home? Whether you are in need a caregiver or companion services, you are probably wondering how to pay for in-home care or a companion to help out a few days a week. Not everyone is lucky enough to have Long Term Care insurance, so what are your other options?

Having to pay long-term care costs can quickly drain your savings. Genworth’s recent Cost of Care Survey puts the national median cost of a private room in a nursing home at about $104,000 per year, and a year in a 1-bedroom assisted living care facility at an average of $57,000. Compared that to in-home care costs of $49,900 a year for 40 hours of help per week, or half that for companionship services 3 times a week.

Long-term care insurance premiums have climbed steadily for several years now. Insurance companies that offer this type of insurance are rejecting applicants after reviewing their health history. We suggest you check with a financial advisor or attorney of course, but here are some alternatives to long-term care insurance that provide good coverage for those in need of long-term care or frequent care at home:

• Short-term Care Insurance, or Convalescent Insurance, is a policy that offers between $50 to $300 per day of long-term care coverage for 180 to 360 days. No long-term commitment for the insurance companies means the premiums are generally less than traditional long-term care coverage. These types of policies have short or no waiting periods, allowing benefits to start immediately for those in need. Those under the age of 85 are normally eligible for this type of coverage.
• Critical-Care or Critical-Illness Insurance are two types of coverage that offer lump-sum payments to people diagnosed with cancer, stroke, heart attack, and other serious illnesses. Aflac is an example of a carrier that offers critical-care and critical illness insurance with daily or monthly benefits for inpatient rehab and continuing care. Those seeking long-term care coverage through critical-care or critical-illness insurance are not able to receive coverage if the issue is from past diagnosis, only if the injury or illness is recent and previously unknown.
• Annuities With Long-Term Care Riders can give a person a stream of monthly payments to use specifically to pay for Long Term Care. The Internal Revenue Service allows money invested in an annuity with a long-term care rider to be used tax-free to pay for long-term care as defined under the contract. Medical underwriting is less stringent than for traditional long-term care, and if long-term care is not needed, it is possible to redeem the accumulated value of the annuity. Keep in mind that annuities need to be purchased upfront, and the money is normally unavailable for a minimum number of years.
• Deferred Fixed Annuities for “after” retirement is a pre-planning tool, and a smart way to hedge against future costs by putting money down prior to retirement with the promise an insurer will pay monthly sums when a specific age is reached. It is not designed exclusively for long-term care, but can give you peace of mind that if long-term care is needed after you retire, there is a monthly cash flow set aside to pay for the services of a Home Health Agency.

Visiting Angels Homecare caregiving and companionship services provide you or a loved one with either short-term or long term services which include personal care and help with the daily routine as well as transportation, shopping, cooking, housekeeping, medication reminders, social interaction, and so much more like walking the dog.

Contact Us: Everyone should have a plan for long-term care, no matter what their age. Folks are living longer than ever, meaning some extra help with everyday activities will be necessary as you age, whether you become cognitively impaired or not. It's impossible to predict your chances of needing long-term care, or how long you may need it. And since cost of care can be expensive, it's important to have a plan because government programs such as Medicare and Medicaid surprisingly only pay for some LTC services and have many restrictions.

Till Next Time!

Irv Seldin, JD, President and Owner, Visiting Angels of the Palm Beaches

This article is not intended as medical, legal, or financial advice.