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Insurance: Bridging The Long-Term Care Gap

Aug 17, 2007
Providing for adequate health care is one of the top concerns for today's seniors. And yet, many find themselves coming up short when that need is for long term care. With costs skyrocketing and government purse strings tightening, planning for such care has never been more important. Don't let long term care costs take you by surprise.

The gap that exists between what seniors need in long term care and what Medicare and Medicaid will cover is huge. Combine that with the proposed Congressional bill restricting Medicaid nursing home coverage, and it's clear to see that seniors and those nearing retirement simply can't afford to ignore this important issue.

How you approach your long term care needs, which include custodial and skilled nursing in-home care, assisted living facilities and nursing home care, depends greatly on your economic situation. For those with low incomes and little assets, there are few choices. Most likely, should the need for long term care arise, you'll quickly spend down your assets and easily qualify for Medicaid.

For those with an annual incomes exceeding $75,000 and with assets of $500,000 or more, you could simply pay for it out of pocket. But with nursing homes costing thousands of dollars a month and some seniors needing years of such care, even a well-lined nest egg could experience a drastic drop in value. A more prudent approach would be to purchase long term care insurance and use that to pay for any long term care you or your spouse may need.

The real conundrum exists for those seniors of moderate means, those with incomes between $30,000 and $50,000 who have a few hundred thousand dollars in assets. Long term care needs could gut your life savings and impoverish the healthy spouse. But long term care insurance can be very expensive and hard for these seniors to afford.

Long term care insurance is complicated and there are many issues you must understand when considering it. My next article will be devoted purely to better understanding long term care insurance and what to look for when buying it.

If purchasing long term care insurance isn't an option for you, there are still some strategies you can use to cover that care should you need it. Selling your life insurance policies, called a life settlement, is one option. Reverse mortgages can also free up needed cash. Selling your home, however unpleasant that may be, can also provided needed funds. But in all of these strategies it is better to leverage those proceeds by using them to buy long term care insurance, if possible.

But for now, let's consider some issues that none of us like to think about, but will greatly influence how we each address our long term care needs. When someone is no longer able to care for themselves, usually the healthy spouse, if there is one, will take over the care. Few seniors, wealthy or not, are quick to dip into their savings to hire nurses or other care givers to help out.

The result is that the healthy spouse often sacrifices their own health and well-being to care for the sick one. We've all seen it happen, how the 'healthy' spouse becomes exhausted and emotionally spent trying to meet the overwhelming needs of the other.

If they're lucky, their adult children will step in to help shoulder the burden. Some families have gone on like this for years, with sons and daughters spoon feeding their parents and changing their diapers. The emotional toll on the family in these situations is indescribable.

How much easier life is when seniors take active steps to provide for this care properly. Then the family can spend their emotional and physical strength on cherishing their loved one, without ruining their own lives in the process.

No one can predict with certainty how their end-of-life will go. But the fact remains that nearly half of all seniors will need nursing home care. Those who don't are likely to need some kind of outside help. Plan now for how you're going to provide for your long term care. Your health, and the health of your loved ones, depends on it.
About the Author
Nationally-syndicated financial columnist and Certified Financial Planner Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He will answer your financial question FREE at http://www.guardingyourwealth.net/
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