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By Matt Sussman, CLTC
American Insurance Planners, Inc.

 

 

Genworth Financial recently released their 2017 cost of care survey and the results may have you cleaning coffee off your screens. The results reflect the median cost of long term care services, which increased by 4.5% from 2016 to 2017. This is the second highest year-over-year increase in cost for long-term care in history.

There is some good news for us, though, as the Philadelphia area is not the average. When we think of being below-average, it is usually a negative connotation, and usually applied to the Phillies. In this case, however, I encourage you to embrace being below-average. The cost of a private nursing home increased by only 2%—to $131,400 a year—and the cost for a private one-bedroom unit in an assisted living facility increased by 3%—to $52,500 a year.

The most common type of care is at home. And the cost for a homemaker health aid increased to $52,620—or just over a 1% from 2016—based on 44 hours of care per week for 52 weeks. The U.S. Bureau of Labor Statistics reports that there are about 41.3 million people providing unpaid eldercare at home, and about one-fourth of eldercare providers engage in unpaid eldercare on a given day, spending an average of 2.8 hours providing this care.

The question I always like to ask folks when I meet with them is: What is your plan should you need care at home? In most cases, they don’t have a plan, as most folks think it will not happen to them.

It is very important for you and your family to have a plan in place. Having long term care insurance is certainly one option, but it is not the only option. The plan could be that, if you need care at home, your spouse will take care of you, your children will also help take care of you, or you may be earmarking funds that can be used to pay for a home health care individual to come in and take care of you. Or maybe even option “D”, all the above. But there should be something. As they say, failing to plan is a plan for failure.

We know when it comes to needing care in an assisted living facility or nursing home, there is no getting away from the tremendous costs. If you have not planned ahead, the only recourse is government assistance via Medicaid, which only kicks in once you and your spouse have spent down everything else.

There are more insurance options today than ever before to help pay for the care in a facility or even at home. Some plans even offer a death benefit paid out to the beneficiaries should the person covered never require long-term care.

If you think care in a home or facility is something you may need down the road and want to get a proper start on research, please contact Matt Sussman, CLTC at 800-789-5191 or msussman@aiplanners.com.


By Matt Sussman, CLTC
American Insurance Planners, Inc.

 

 

How many times have you said that “it” is not going to happen to me? I know I have, and all of a sudden, “it” happens. Does this behavior stem from denial? Lack of being prepared? Maybe a little bit of both? Well, let’s talk about “it” not happening.

What I am talking about is the possibility that each one of us may need extended care sometime in our lives. I know, “it” is not going to happen to me. I even asked Peter’s crystal ball, “Will I ever need care?” To my delight, it was cloudy. But according to the U.S. Department of Health and Human Services, 70% of people turning age 65 this year can expect to use some form of long-term care during their lives (read here). Although this information is credible, it may be hard to relate to.

Personally, I am a bit more realistic, as I believe only about 50% of the people will need care while the other 50% will not need care. The real question is “Which side of the equation will you be on?”  If you guess wrong and you do need care, how will that impact the ones that you love and care about? How will it affect them emotionally, physically and financially?

Due to this uncertainly, it is prudent to address how you are going to handle this real issue. Based on John Hancock’s 2016 Cost of Care Study (read here), the average cost of a private nursing home today in the Philadelphia area is $110,321 a year. How would your financial plan be disrupted if you unexpectedly had this bill? Where would the money come from first? Would there be tax consequences to using this money?  What would it do to the current financial obligations you already have?

Today, there are more insurance options than ever before to help fund the need for extended care, whether it be at home or in a facility. With these planning options, we can help offset that cost of care and you will pay pennies on the dollar if care is needed. 

Your financial plan is only as good as your weakest link, and as Ben Franklin said, “If you fail to plan, you are planning to fail!”

If you would like to learn more about Philadelphia long term care planning and if it may be right for you, please contact me at (800) 789-5191 or info@aiplanners.com.


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