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Make sure to have a plan in place to finance care costs later in life

In my previous articles about what choices are available when the time comes that you or a loved one should need care, I have also addressed "who pays for what?" It's surprising to me how many people ask, "Doesn't Medicare pay for that?"

Medicare must be looked at as an insurance policy that covers the medical care: Part A - hospital coverage, Part B - outpatient costs such as doctor's visits, lab and X-ray tests, various therapies (physical, occupational, speech) and add to the list the dreaded "observation status in the hospital." Medicare is not a payment source for in-home companion or aide care, assisted living care or nursing home care (with the exception of limited time rehabilitation services after a three-day hospital admission).

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So where does the money come from for care when one can no longer perform all of their activities of daily living or remain safely in their current home without assistance or supervision? Many also unfortunately believe that there is this magic medical assistance/Medicaid plan that will provide for care. There are all kinds of stipulations and criteria that one must meet before qualifying for MA. Most importantly, having a true need and not just wanting to save your money for the inheritance you hope to leave for your family.

Equally surprising to me is the idea that some seniors feel that the nest egg they have saved shouldn't have to be used for their medical care, that someone else (like medical assistance) should foot the bill. I see this idea presented in some attorney newsletters, with articles such as "Don't Let The Nursing Home Get your Money." Everyone has his or her own philosophy on the subject. Some are horrified of ever having to turn to MA; others see it as an entitlement.

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Whatever the case may be, leaving it to the wind and avoiding planning for future care if and when it's needed is a really bad idea! While I understand that many might be barely able to afford all the life necessities, if you can start to plan, the time is now. Yes, you my readers, there is no golden age to start planning! It's time to think about it now, regardless of your age.

Care is expensive: In-home companion or aide care can cost $18 to $25 per hour, averaging $14,000 a month for 24/7 hourly agency care, $5,500 to $6,000 a month for live-in nonshift care, $2,800 to $11,000 a month for assisted living care and about $7,000 to $12,000-plus a month for nursing home care.

How do you plan for that?! You can live in denial and say, "I'm just going to die and avoid all that," but I've not really seen that plan work out too well. The other one is "I will let the kids figure it out." Oh boy, lucky kids – disaster. Or you can start to plan now. One option is to consider long-term care insurance.

I don't get any kickback for advocating LTC insurance. I will tell you when I'm meeting with a client who has needs or a family whose loved one has overwhelming needs and I ask "Do you have long-term care insurance?" and the answer is yes, I breathe a sigh of relief. Actually I would go further than that and say I'm doing a little dance in my head! So whatever preconceived ideas you have of LTC insurance, in my mind, the instinctive little head dance says a lot.

Of course, some of my excitement is quickly dashed after looking at the policy to find that it's not ideal. And by not ideal, I mean not well thought-out or perhaps purchased from either a "not-so-conscionable" or "not-so-versed" insurance salesperson. There are many great policies out here — and some not-so-great policies out there as well.

The company that one purchases from also makes a big difference. Knowing, however, what you are getting is the most important detail. The bad news is LTC policies are not cheap. Some believe that saving that money or perhaps investing it is wiser. Again, I breathe the sigh when I hear "yes, I have an LTC policy."

Melissa Barnickel from Baygroup Insurance has been assisting customers for more than 20 years. As a broker, she has long discussions with her clients — whether face to face or via phone or computer — and offers her guidance while gathering an understanding of their needs. Melissa also makes sure they know what they are buying and makes suggestions for wise choices. The difference between a broker and an agent is a broker represents the clients and can shop many carriers; an agent represents one carrier. Essentially the broker works for the client and an agent works for the insurance company.

Making an informed decision when purchasing insurance can be the difference between staying in your home, if that's your wish, and being forced to move into a higher level of care. For example: Some older policies do not pay for in-home services, only assisted living or nursing home level of care. Some also require that the assisted living have RN nurses staffed 24 hours, which is not very realistic, and forces people into nursing home level of care. Elimination periods, daily or monthly benefits, length of benefits and inflation options are all important decisions to be discussed with a reputable broker who is well-educated and specializes in long-term care insurance.

LTC insurance might not be for everyone, but it can give your loved ones peace of mind that there is a plan in place to at least take the edge off expenses. When I was in underwriting, I was sweating it. When I received my policy, I did the dance!

For more information on LTC insurance, contact Melissa Barnickel at Baygroup LLC: Melissa@baygroupinsurance.com or 410-557-7907. To view the Shoppers Guide to long-term insurance, go to baygroupinsurance.com/resources.

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