If you or a family member needed long term care, how would you pay for it?
One of the biggest reasons people don’t create Long Term Care plans is because they believe federal programs like Medicare will cover their expenses. In reality, Medicare is largely restricted to specific illnesses and injuries and only pays for short term, skilled nursing home care following a hospital stay of at least three days. After 100 days, Medicare will pay nothing for these services.
Medicaid is a joint federal and state welfare that provides health care coverage for low-income Americans. In order to qualify for Medicaid, you must spend down your assets to the poverty level ($3,000 or less). Moreover, new rules surrounding this program restrict you from transferring assets to your children or others in order to receive Medicaid assistance.
It’s a common misconception that regular health insurance will cover LTC needs. In truth, health insurance generally will NOT pay your LTC costs because Long Term Care is not considered medical care.
Disability Income Insurance
Disability income insurance provides you with income if you become sick or injured and are unable to work. Since coverage usually ends at age 65, it is not designed to cover LTC expenses.
Many people use their personal savings and assets to pay for LTC costs, which can put a significant amount of retirement savings at risk. This plan may also require a dedicated, aggressive and immediate savings plan. It’s impossible to know when or how long LTC services will be needed, which makes the target savings amount difficult to determine.