While many people assume that Medicare will cover the cost of all long-term care needs, it likely won’t: specifically, it does not cover the cost of assistance with daily activities such as bathing, getting dressed, and general mobility that is needed by many as they age.
Nearly a year in, COVID has introduced many changes to our work and family routines. Many of those quarantining with their families have found themselves in new caregiver roles, balancing the needs of children or parents with the ongoing responsibilities of work. Add to this the fact that most nursing homes and assisted living facilities have put a halt to visitors, or at least made visiting a loved one much more challenging, and it can all seem overwhelming.
There may be a slight silver lining, however, as the current context of care has caused many to think about their own long-term care and consider how they’d like it to look.
This is a good thing. For while the idea of being unable to care for one’s self is scary – an emotionally charged topic that many people tend to avoid - avoiding the topic does not mean the risk will go away. In fact, 70% of people aged 65 or older will need long-term care at some point in their lives. And while many people assume that Medicare will cover the cost of all long-term care needs, it likely won’t: specifically, it does not cover the cost of assistance with daily activities such as bathing, getting dressed, and general mobility that is needed by many as they age. So while the Federal Long-Term Care Insurance Plan (FLTCIP) may be a good place to start for Federal employees who foresee simpler coverage needs, it’s imperative to investigate all options to find the best fit.
Doing so starts with establishing your need, then understanding how long-term care insurance works and considering the numerous options available in order to determine the best course of action for you and your family. One of the first questions to consider is where you or your loved one hopes to live. While the idea of a nursing home comes to mind, most individuals hope to remain in their homes for as long as possible. In fact, homecare is so common that it represents half of all long-term care claims. However, something as simple as the state you live in (or plan to live in) can drastically impact the costs associated with in-home or in-facility care – if you plan to retire elsewhere, be sure to investigate how your future home state compares so you can budget accordingly.
As you work with a financial advisor to build a deeply customized program for yourself and/or your spouse, you should also ask yourself questions about your costs and resources. For example: Are you able to self-insure to any degree? What types of costs are you facing? Do you have other resources or assets available to help cover these costs?
Next, look at the long-term care insurance option that would offer increased flexibility, like an allowance for wheelchairs, ramps, grab bars in the shower, medical alerts systems, etc. For those thrust into the role of caregiver, a care coordinator benefit can help get the service and reimbursement processes started. Caregivers may also want to pursue a respite care benefit, which would allow your grandmother to stay in a nursing home for two weeks while you take a much-needed vacation (once travel is safe again, of course) to benefit your mental health. Understanding the importance of flexibility and how it applies to your specific situation can help alleviate future heartache and financial strains when the time comes to bring in assistance. These benefits are particularly prudent given one child often assumes 100% of care requiring over 20 hours per week.
As these many considerations make clear, navigating the long-term care insurance arena and knowing what questions to ask is difficult without help. A knowledgeable, trusted financial advisor can assist you in designing a thoughtful plan which will allow family to manage the benefits rather than providing the benefits themselves. An advisor can also suggest alternative options, which may be more realistic after the age of 65 when price and health ratings become bigger hurdles. Such options include a life insurance policy or annuity with a long-term care insurance rider.
As this pandemic has reminded us, life is and always will be full of uncertainty, and quality time with loved ones is our most precious commodity. Proactively planning for long-term care can allow for more meaningful interactions with loved ones in your golden years. By accounting for flexibility between FLTCIP and other options, you’ll be better equipped to handle the unknown.
Kateri Turner, CFP®, ChFC®, ChFEBC
Financial Advisor, GEBA
Kateri joined GEBA in 2016. As a CERTIFIED FINANCIAL PLANNER professional, Kateri is well versed in all aspects of personal finance. Kateri is licensed for the sale of investments, insurance, and long term care. She believes that it is important to take a holistic approach to wealth management that includes savings, investments, insurance, retirement income, estate planning, and tax diversification. Kateri enjoys assisting members who are retiring, but finds great joy in developing long term financial planning relationships.
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