the community, or in residential facilities such as nursing homes or assisted living facilities. Residential care is obviously the most expensive option. Long-term care insurance protects savings against the high cost of care at a nursing home or assistedliving facility, or help from a home health worker, etc. Recently, the results of two annual surveys were released regarding the cost of long-term care: “The 2012 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs - November 2012” Genworth Financial’s “2012 Cost of Long Term Care Across the Nation.” The MetLife Market survey was published by the Mature Market Institute (MMI), MetLife’s research organization. The study shows that: • The national average daily rate for a private room in a nursing home is $248, while a semi-private room is $222 up from $239 and $214 respectively in 2011. Annually, this comes to $90,520 and $81,030 respectively. • The national average monthly rate in an assisted living community rose from $3,477 in 2011 to $3,650 in 2012. Annually this is $43,800. • The national average daily rate for adult day services remained unchanged from 2011 at $70 in 2012. Annually this is $25,550. • The national average hourly rates for home health aides ($21) remained unchanged, while the homemaker hourly rate increased by 5.3% from $19 in 2011 to $20 in 2012. It’s difficult to figure the annual cost because each situation is so different in the number of hours required each day. The median stay in a long-term care facility is 463 days, according to the Centers for Disease Control and Prevention; and 56 percent of new claims under long-term care policies are for home care according to the American Association for Long Term Care Insurance. These statistics contribute to the fact, according to the Center for Retirement Research at Boston College, more than 54 percent of middleincome adults and 44 percent of high-income adults are at risk for a lower standard of living in retirement. Without a policy, you’ll pay out of pocket until you’ve nearly exhausted your assets and can qualify for Medicaid. So, if you have assets you want to protect for a spouse or heirs, the insurance may make good sense. 60 | Encore Life © | Summer 2013 | encorelifemag.com
It is a general misconception that Medicare covers long-term care. If the care needed can be classified as “skilled,” coverage under Medicare, Tricare and a Medicare Supplement; then only the first 100 days will be covered (20 days of full coverage, 80 days with a co-pay.)—nothing for custodial or intermediate care which is what the majority of the residents need. Also, a person has to meet the conditions to be eligible for Medicare; either by virtue of age or as a result of disability. Also, with original Medicare as their primary insured they must have a three night stay in the hospital before admission to a nursing home for benefits to be paid. Medicaid will pay the bill for those who are qualified, basically meaning those who have no assets and only a limited income. However, Medicaid planning involves spending down your assets until you have about $2000 left. Recently many states have ratified the partnership bill which actually allows one to qualify for Medicaid, if necessary, while protecting all or a portion of the assets. This underlines the necessity of planning properly for the senior years. Planning for the senior years needs to begin while still employed and preferably, long before reaching middle age. The four major considerations for your planning are your retirement, health insurance, final expense/estate planning and long-term care planning. Only about 8 percent of retired seniors own longterm care insurance. However, a huge segment of the population stands to lose billions of dollars in remaining retirement assets, not to mention impact on family, when extended care becomes necessary. People continue to put off the purchase of long-term care insurance, however, partly because the average person doesn’t expect to actually need it or if they do end up needing it, they will be ‘old.’ They think they can wait until they are a little older, a little closer to the possibility of needing care. Such thinking is a mistake. The statistics show that 25% of the people who need extended care are under the age of 50, often in their 20’s and 30’s. They may be victims of accidents or tragic illnesses that leave them debilitated for life. Then, if a person waits until they think they may need it, health issues may keep them from qualifying, thus ensuring that the burden of their care will be put on