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Long Term Care

Long Term Care

Long Term Care for Seniors is a subject that should be getting much more attention.  Oftentimes folks don’t realize how much Long Term Care is going to cost.  So what is Long Term Care?  Long Term Care is care for a Senior, be it mom or dad or any other loved one who will end up requiring care for the duration of their life at a facility, whether it is an Assisted Living Facility, Personal Care Home or Nursing Home, they are all Long Term Care Facilities that provide care over a long period of time.  Presumably for the remaining duration of Mom’s golden years.  So making sure the finances are in place for cover the cost of Long Term Care is imperative. 

What options are there for Long Term Care?  Well, one of the most overlooked options which is a very cost effective option is a Long Term Care Insurance Policy.  There are dozens of companies out there from Farmers to John Hancock Insurance Company who provide various options.  Some Long Term Care Policies will cover say a dollar amount lets say$2,500 per month while the social security income might make up the difference.  Other policies will cover $5,000 per month!  It just depends on what options and policies your purchase.  Most people feel it’s a waste of money to buy something they might use and don’t get a Long Term Care Policy.  However, the $150,000 house you might have to sell will only last you 3 ½ years if your monthly cost is $3,500 a month.  Some patient care can be in the $5,000-$6,000 range.  In that case your in big trouble financially. 

How do you determine how much you need?  The old adage, plan for the worst hope for the best is the course of action desired.  In other words plan for higher cost and hope you need little of no care later.  But should you or a loved one require Long Term Care you’ll be set financially. 

Let’s use an example.  Mom is now requiring to be placed at a Long Term Care Facility and the cost will be $3,500 per month.  The Medicare deductable and Insurance deductable as well as medications could cost another say $100 per month.  Also, mom needs adult briefs and extra personal items every month so we can easily add another $200 per month.  Total money needed for Mom per month is $3,800 per month.  Mom has Alzheimer’s, she’s incontinent of bowel and bladder and uses a wheelchair.  In this example Mom has a house that the children had to sell because Mom does not have enough money coming in to pay for her care.  Mom has no 401k or any other retirement income except for Social Security.  Let’s assume mom get $950 per month.  That still leaves us short $2,850.  The proceeds from the house sold after expenses gave you $150,000.   This $150,000 will pay for moms care for 4 years and a few months at the same level of care. 

Now, let’s make this example a little too realistic.  We are using $3,800 currently.  Now assume that after 1 year the facility charges went up for inflation cost of $100 dollars and mom needs more care and the Long Term Care Facility increased the cost by another $200.  Mom now requires $4,100 per month.  Out of the $150,000 we have used up $45,600 the first year only.  Leaving us $104,400 for Mom’s care.  Assume her new care cost of $4,100 remains the same for 2 more years that is another $98,400.   After 3 years in a facility mom has only $5,600 left.  It’s very possible mom will need care for 3 more years!  But one problem, we ran out of money.  Only about 1 months worth of money left. 

The above example shows how serious we need to plan for Long Term Care.  We only included Mom in this example, but what would happen if you needed to plan for both Mom and Dad?

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