According to LongTermCare.gov, “Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years.” Although the period of time we need care for is typically 1 to 3 years, about 14% of people will need care for more than 5 years. The cost of care in the Bay Area, according to the 2018 Genworth Cost of Care Survey, now exceeds $110,000 annually (nursing home semi-private room). Pretty soon that retirement savings could be exhausted by long-term care expenses.
There are a couple different ways someone can plan to pay for long-term care. Since traditional health insurance and Medicare do not cover these expenses, people have to either self-insure, buy long-term care insurance or hybrid products (like annuities and life insurance with long-term care benefits), or attempt to qualify for veteran’s benefits or Medi-Cal. For many Piedmonters, self-insuring seems like the natural choice, but leveraging your financial strength and using an insurance company’s money can be even better. Long-term care insurance can be difficult to qualify for and hybrid products can be confusing, so it is important to start early and do your homework. If you served in the military there is a program called Aid & Attendance that may help pay for long-term care. Finally, Medi-Cal is a program designed for medical care for public assistance recipients and other low-income persons, but with proper planning it can be a part of an individual’s estate plan. Another important piece of any long-term care plan is your support structure. Having family or close friends can make a big difference in someone’s ability to live independently. Informal caregiving and/or some level of interdependence can keep us healthier, at home, and help us preserve our assets. Even in a community like Piedmont, we have to take care of each other, because even our friends and family might have failed to plan… and that is a plan for failure.