Americans age 65 and older have more than a 70 percent chance of needing some form of long-term care. Aging at home as well as residing in an assisted living facility or retirement community are all options. However, to ensure your preference, you will need to plan ahead.

With the aging of the Baby Boomers, there is an increased demand for alternative living arrangements that can provide some level of assistance and/or healthcare. While remaining at home may be most desirable, this may still require assistance from home health professionals. As you contemplate your future or that of a senior family member, it may be helpful to understand the various types of facilities that are available and the financing options.

Assisted Living Facilities

Assisted living facilities have experienced rapid growth in the past twenty years. According to the National Center for Assisted Living, the average age of an assisted living resident is 85 years. Approximately 74 percent of residents are female and the median length of stay is 22 months. The average monthly cost for assisted living in Indiana is $3,136. This compares favorably to the national average of $3,551.

According to LeadingAge, approximately 82 percent of assisted living residents are private pay with 10.6 percent receiving financial help from family. At this time, only 6 percent of residents are paying with long-term care insurance. Medicaid pays for those who have exhausted all their resources through its waiver program. It is important to note that Medicare does not cover assisted living expenses.

Continuing Care Retirement Communities

Continuing care retirement communities (CCRC) typically offer a wide range of care facilities, including independent living, assisted living, memory care, and skilled nursing.  When CCRCs originated, residents turned over all their assets and the CCRC provided care for the remainder of their life. However, today the payment structure of CCRCs has become more complicated and most offer different types of contracts.

Life Care Contract. With this type of contract, the resident pays an entry fee as well as a monthly fee. The monthly fee stays the same regardless of the level of care required, but does adjust for normal operational and inflation increases. This contract can be beneficial as the resident moves from independent living to skilled care. 

Modified Life Care. The resident will pay an entry fee and a monthly fee for services. However, this type of contract will actually limit the number of days that the resident can stay in assisted living or skilled nursing before a change in the monthly fee is applied. Many of these contracts also offer the option of a refundable entrance fee which allows more assets to transfer to family when the resident moves out or passes away. People who select this option must have sufficient assets to pay for any uncovered health care costs and any future costs related to increased services.

Fee for Service. The entry and monthly fees only apply to housing, residential services and amenities as defined in the contract. Any health care services are paid out of pocket at the time incurred. If an entry fee is charged, typically 90 percent of the fee is refundable. As the level of care increases, the monthly payment increases. This type of plan provides the most flexibility, but minimal security. However, it suits a resident that has substantial assets and/or long-term care insurance.

Rental. This contract provides a resident with living accommodations and basic amenities. There is no guaranteed access to health care services. There is no entry fee and the monthly fee covers the cost of maintaining the rental unit.

Stay at Home Options

In studies provided by AARP and others, 90 percent of seniors want to remain in their home. Many times the healthy spouse provides the needed care as long as he/she is able. Once a spouse’s services are no long sufficient, it may be necessary to hire health care professionals to provide anything from a few hours of care per day to 24-hour supervision.

The hourly rate paid home health care professionals in Indiana is $23. The national average is $26 per hour. In cases where the services are prescribed by a physician, Medicare may cover some of the expenses incurred.

Summary

The majority of Americans will need some assistance as they age. Whether this is provided by family or professional care givers, it is important to plan for this contingency. Anticipating the need, knowing one’s options, and preparing for the financial impact will certainly enrich those senior years.

This article was contributed by Meredith Carbrey, CFP, a Wealth Advisor at Bedel Financial Consulting, Inc.

Elaine E. Bedel, CFP, is CEO and president of Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. She is a featured guest each Wednesday on the WTHR (NBC, Indianapolis) Channel 13 News at Noon, "Your Money" segment. Elaine’s book, "Advice You Never Asked For… But wished you had," is available on Amazon.com. For more information, visit www.BedelFinancial.com or email Elaine at ebedel@bedelfinancial.com.

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