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Reality of long-term care financing

At least 70 percent of retirees will likely need long-term care at some time in their lives. Preparing for this need requires long-term care planning and dealing with some new realities.

Long-term care expenses can now erase savings accrued over a lifetime. The average monthly cost of nursing home care in this country was $7,148 to $8,121 in 2017. However, Medicare does not pay for the cost of this care and Medicaid is an option only when a person becomes financially destitute. In most states, the Medicaid look-back period to recover transferred is 60 months.

Premiums for this care may also increase. Many times, family members are ill-equipped to assume care responsibilities.

Planning can overcome some of these obstacles. First, a person should take an inventory of their current assets, spending requirements, and future financial needs.

This will help outline a basic plan and determine how much long-term care insurance is needed. Consider the differences between traditional long-term care insurance and other options such as a life insurance with a long-term care or chronic care rider. The cost difference and if it is paid is paid as reimbursable coverage or a declared benefit is an important factor.

Other important features are whether the costs must be paid upfront or submitted for later reimbursement. For home health care coverage, review whether family members are paid for providing treatment or whether payment can be made only to certified or licensed caregivers. Depending on the policy, unused premiums may be lost or distributed to heirs and beneficiaries.

A power of attorney covering health care directives, living will and finances is also important to assure that the desired care is provided. Having one person, with backup contingencies, may be recommended to avoid disputes. Sharing information with family and friends also helps avoid disagreements that can hamper a plan and permanently harm family relationships.

An estate attorney can help with this planning and protecting assets. They may also help navigate the rules governing Medicare and Medicaid.

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