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VOL. 128 | NO. 139 | Thursday, July 18, 2013

Dana and Ray Brandon

Handling Long-Term Care Costs

By Ray and Dana Brandon

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Ray’s Take The cost of long-term nursing home care is increasing at a dramatic pace. According to the latest Genworth Financial report, the median annual cost is now $83,950 and has risen 4.5 percent annually over the last five years.

When you consider that 70 percent of 65-year-olds will need long-term care at some point, the odds that this statistic could include you are pretty strong. But needing long-term care does not necessarily mean checking in to the nursing home. Evaluating this risk and preparing for it financially is more complicated.

Many people believe that Medicare will cover nursing care. However, at best Medicare only covers some costs of the first 100 days of rehabilitative nursing care.

The three basic options for paying for long-term care are out-of pocket, Medicaid, or long-term care insurance. Which one is best for you depends on many factors including your assets, whether family members are close enough to help with care, and even your family health history.

Medicaid is available for people who have exhausted just about all of their other resources. You are also limited to certain facilities with available Medicaid beds.

If you have the financial resources, you can simply pay for long-term nursing care. While nursing home stays average 2.5 years, you might require longer and severely deplete any inheritance you might wish to pass on.

Long-term care insurance is another option. In recent years, these policies have become more standardized, but you still need to read the fine print carefully to know what your policy will pay for. Further, the companies can and have raised premiums and/or reduce benefits depending on how things are going for them, not you, so you may not be able to shift as much risk as you hope. But if you want to leave an inheritance or are simply up nights worrying about nursing care, insurance is an option you should seriously consider.

Dana’s Take When aging loved ones need support to live safely and comfortably it impacts the entire family. Discussing options before the need actually arises could smooth the process for everyone.

A senior family member may assume that younger family members will supply the necessary help. However, these family members’ work and family commitments may not allow for the hours needed.

There is also the question of whether to opt for a nursing home or rely on in-home caregivers. The second option can be less expensive and a more comfortable choice for seniors who can perform some life tasks. However, there comes a point when even round-the-clock care isn’t enough.

Talk openly about what your expectations and options are well before the need arises. Advanced care for seniors has an effect on multiple generations in a family. Their voices should all be heard.

Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at raybrandon@brandonplanning.com.

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