How Can You Plan for Long-Term Care?
The prospect of long-term care (LTC) is a reality many will face as they age. Nearly 70% of individuals turning 65 will require some form of long-term care in their lifetime. With rising costs and the complexities of navigating long-term care, proactive financial planning is essential to meet care needs while maintaining financial stability.
What is Long-Term Care?
Long-term care includes medical and non-medical assistance for individuals with chronic illnesses, disabilities, or cognitive impairments. These services can be provided in nursing homes, assisted living facilities, adult day care, senior centers, or at home by paid caregivers, family members, or friends. The level of assistance depends on the severity of an individual’s healthcare needs.
How to Plan for Long-Term Care
The sooner you can plan for long-term care, the better. Start by assessing your risk factors, like age, gender, family history, and lifestyle. Women typically live longer than men and may have a greater need for long-term care as they age. Maintaining healthy habits can help reduce the risks of LTC, but genetic predispositions to cognitive impairment conditions like dementia and Alzheimer’s should also be considered.
How Much Does Long-Term Care Cost?
LTC costs vary depending on where you live and how much support you need. It’s important to note that Medicare doesn’t cover non-medical long-term care, but you may qualify for Medicaid if you meet the eligibility requirements. Other options for funding long-term care include:
- Personal Savings: If you can, designate a portion of your savings for long-term care needs.
- Health Savings Accounts (HSAs): Contributions to an HSA are tax-deductible and can be used to pay for qualifying medical expenses, including some long-term care costs.
- Long-Term Care Insurance: LTC insurance helps cover costs associated with care. Lower premiums may be available for those in their mid-50s, as policies become more expensive as you age.
- Veterans Benefits: If you are a veteran enrolled in VA health care, you may be eligible for long-term care services.
Estate and Tax Planning Considerations for Long-Term Care
Estate and tax planning should be considered in your long-term care needs. You should make sure that your estate plan addresses health concerns. Remember that in addition to using your HSA, you may also be able to deduct medical expenses if they exceed 7.5% of your adjusted gross income.
