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It is impossible to know with certainty who will and who will not need long-term care. What we do know is that if you are 65 years old today, you stand about a 70 percent chance of needing some type of LTC services before the end of your life. Keep in mind that your spouse or partner has the same chance of needing LTC care. Given the odds, it only makes sense to plan for the possibility that LTC will be needed.
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As a retiree, you will likely count on Medicare to cover most of your healthcare expenses. Unfortunately, Medicare will not cover LTC expenses. If you purchase or retain private health insurance, that policy also likely excludes expenses related to long-term care.
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Nationwide, the average cost of a year on long-term care for 2022 was just over $100,000. Indiana tends to track the national average where LTC expenses are concerned with an average year in a private nursing home facility running about $104,000 per year and a year in an assisted living facility averaging just over $50,000 for 2022. Medicare will not cover LTC expenses nor will most health insurance policies. Unless you anticipate being able to easily cover an extended stay in a LTC facility out of pocket, it is best to have a plan in place that will help with the expense. One option is to purchase a long-term care insurance policy.
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Like all insurance policies, there will be variations from one LTC policy to another. Typically, however, a long-term care policy will cover things such as:
- Nursing home care
- Home care
- Respite care
- Hospice care
- Personal care in your home
- Services in assisted living facilities
- Services in adult day care centers
- Services in other community facilities
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The cost of a long-term care insurance policy can vary widely and will depend on several factors. Generally, the younger you are when you purchase the policy the lower the monthly premium will be. When deciding if a LTC policy makes sense financially, however, remember that the younger you are when you purchase the policy, the longer you will likely need to pay those premiums before benefits are needed.
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The Indiana Long Term Care Insurance Program is a partnership between State government and private insurance companies. Insurance companies voluntarily agree to participate in the Program by offering long term care insurance policies that meet more stringent State requirements than other policies. There may be Medicaid planning benefits to purchasing a partnership policy.
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When contemplating the purchase of an LTC insurance policy, make sure you understand the exclusions, deductibles, waiting periods, and policy limitations. For example, some policies will not pay out benefits until certain conditions are met or until a waiting period has been exhausted. Also check to see if the policy has daily, monthly, or yearly limits and/or if the policy has a lifetime benefits limit that you should be aware of before committing to the policy.
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Medicaid planning is a component within your estate plan that sets you up to be eligible for Medicaid as a senior without putting your assets at risk. Unlike Medicare, Medicaid will cover LTC expenses; however, the income and asset limits can be an obstacle to eligibility for many seniors. Medicaid planning aims to remove that obstacle to make sure you qualify for Medicaid if you need it down the road.
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Talk to an experienced elder law or estate planning attorney about your options regarding paying for long-term care. For many people, the lifetime cost of a long-term care insurance policy is nor worth the potential benefits, in which case, Medicaid planning is a better choice. For others, a combination of LTC insurance and Medicaid planning may be the best option.
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Contact Us
If you have additional questions, contact an experienced Indianapolis, Indiana elder law attorney at Frank & Kraft. by calling (317) 684-1100 to schedule your appointment today.
