Paying For Nursing Home Care

By: Elaine E. Bedel - President , Bedel Financial Consulting

The fastest growing sector of our society is individuals aged 65 or older. According to past research, 43 percent of the over 65 population can expect to spend some time in a nursing home due to prolonged illness or disability. You can finance this need with your own assets, through long-term care insurance, or as a recipient of Medicaid.

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The current average cost of nursing home care ranges from $4,500 to $6,000 per month. The average stay is 2.5 years; however, we all know of individuals who spend ten or more years in a care facility.

Health care plans and Medicare combined generally provide only 3% of the cost of long term care. The additional cost is typically funded through individual investments and other family assets, proceeds from a long-term care policy, or a state�s Medicaid program. Medicaid is available after assets are depleted to a minimum amount set by the State of Indiana or your state of residence.

Your Choice: Self-insure or Purchase a Policy

You can plan to provide for the expenses of long-term care through your cash flow and investment assets. If you have saved sufficiently this may be a very viable option. Generally, families with assets in excess of $3,000,000 can consider self-insuring.

If you have assets in the range of $1,000,000 to $3,000,000, you may want to consider the purchase of a policy. Senior couples with this level of assets would likely spend all the funds in the event both spouses needed such care. However, you should consider the likelihood of the healthy spouse caring for the ill or disabled spouse in their home.

If you have limited assets, the cost of a policy may be prohibitive. You may consider a policy that provides a limited benefit that will supplement your other assets. Medicaid may be the only alternative if there is a prolonged need for this type of care.

Do Your Research

Multiple financial factors need to be considered when determining your need for a long-term care policy. In addition, your personal desire to preserve assets for your heirs may influence your decision.

If you decide to purchase a policy, you will need to do your homework. There are multiple policy features to review. The State of Indiana also provides an incentive to purchase a long term care policy that will provide sufficient funds for approximately a three-year stay in a care facility. Once the policy is depleted, State provided Medicaid benefits are available without the generally required spend down of assets.

Elaine E. Bedel, CFP�, is president of Bedel Financial Consulting, Inc., a fee-only wealth management firm providing financial planning and investment management services. For more information, visit their website at www.BedelFinancial.com or email to ebedel@bedelfinancial.com.

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