One of the most critical, uncomfortable, and intimidating aspects of placing a loved one in a nursing home is planning how to pay for their care. Long-term care in the United States can cost six figures per year, and many people do not realize that health insurance does not cover long-term care. Our nursing home injury lawyers explain how to prepare for an aging loved ones’ future.
Currently, only about 20% of Americans over the age of 65 have some type of long-term care insurance, but an estimated 70% will need coverage before they die. This leaves about half of all people aged 65 and older without coverage, forced to pay for their care either out-of-pocket or through government programs.
The average cost for a semiprivate nursing home room is $80,000 per year. Long-term care insurance is notoriously confusing and there are many people who will never need it. The vast majority of people will, and failing to plan for it can result in bankruptcies and financial devastation.
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Broaching this topic with a loved one can be awkward and difficult, but it is necessary. There are multiple types and layers of coverage, making it hard for families to navigate and compare plans alone. Only 14 insurance companies even carry long-term care policies, charging an average of $3,000 per year. Individuals can be denied coverage due to past or current health conditions.
American Association for Long-Term Care Insurance states that about 45% of people aged 70 and older who applied for long-term care benefits were denied last year. Those who are denied or never applied for long-term care at all are left to pay for nursing homes via their own savings, retirement income, or the generosity of loved ones. In other words, it is best to apply for long-term coverage as soon as possible, before any type of catastrophic illness or injury arises and renders you uninsurable.
For individuals and families who are able to hire a financial advisor, it is best to find someone who has your best interest in mind. Make sure your advisor asks for a complete description of your family’s finances, and takes their time finding the right plan for you. Most advisors do have a financial stake in selling policies however, so consider hiring a fee-only financial planner. These types of planners do not make money from recommending certain insurance plans.
Although health insurance does not normally provide long-term care, some newer policies offer hybrid plans, adding long-term benefits to life insurance plans or annuities.
For those of you considering long-term care for yourself, the following are some tips to keep you on the right track:
- Hire a financial advisor or fee-only financial planner who specializes in long-term care insurance.
- Compare prices between plans offering the same coverage for the same length of time. Ask brokers about the company’s long-term care claims history. A more honest company will have paid out larger amounts over many years. Also, ask if the company has ever been subject to a bad faith lawsuit.
- Consider “elimination periods,” which can be very long and burdensome. Look for a plan with no or a very short elimination period.
- Decide how much risk you are willing to take. Study what you are buying and think about what exactly makes sense for you.
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You should also consider estate planning, particularly if you believe you may need nursing home care in the next few years. Estate planning can include a gifting plan directly to your children or into a trust; buying non-countable assets like funeral or burial accounts; understanding and anticipating Medicare and Medicaid coverage; and establishing paid care agreements with caregivers.
We know how overwhelming trying to plan for end-of-life care can be, particularly if you or your loved one is already in a nursing home. We represent nursing home residents who have been seriously injured in these facilities, and have won millions for our clients. If you have any questions about nursing home negligence, abuse, or elder law, contact our firm for a free legal consultation. We accept clients nationwide.