No Crystal Ball? How to estimate your long-term care costs.

There are so many aspects to long term care: medical, social, environmental, psychological and spiritual.  But the one that I’d like to talk about is the financial aspect.  If you don’t qualify for Medicaid, you will be paying for the overwhelming portion of your long term care.  And with the economy in the shape it is, the government will be seeking to spend less and less.

Consider how you Plan for Other Large Purchase.

Purchasing long term care is one of the largest financial transactions you will make, ranking up there with purchasing a home and a college education.  Depending on your longevity and level of care, it can exceed both by a wide margin, easily being the most costly.

When we think we might be ready to buy a home, we go and look at dwellings, seek professional assistance, learn what is valuable to us, examine the costs and crunch the numbers.  The same can be said for choosing a college.  We start to look well in advance of high school graduation, visiting institutions and coming to an understanding of what is required, what is desirable and what is affordable.  Both of these examples have one thing in common that the majority of long term care purchases don’t: the amount of time we start investigating before the actual need arises.  It seems most long term care is purchased rather quickly.  An event occurs, many times a fall, and then it is decided that assistance is needed, immediately.

Some of us have thought well in advance and purchased long term care insurance.  If you are fortunate to be able to afford a long term care insurance plan, it can provide much assistance.  If you can’t afford insurance, your life savings, assets and pension income will have to suffice.  And since it is the last large purchase you will make, it would seem prudent to investigate long term care scenarios with the luxury of time on your side, not with urgency.

As when purchasing a home or deciding on a university, you can opt to hire a professional who can help you plan for long term care.  You may already have a financial planner or an accountant.  However, I would consider investigating an elder care attorney and/or a gerontologist.  These professions are specific to our discussion.

Figuring out Long Term Care on your Own?

If you wish to investigate the costs of long term care on your own, there are many ways to proceed.

  • On the internet, there are sites that profess to publish the costs of senior care.  Some of them are insurance company sites.  Most often, the figures they provide are estimates or averages.  In my experience, I have not found any site that can tell me what the actual cost of long term care is.  And they can’t, because they have no idea what you want or need.
  • In order for you to establish what the cost of long term care is, for you, you must gather information on long term care facilities or scenarios that interest you and compare them.
  • Whether you use a professional or not, I strongly advise you to visit several long term care facilities, speak to others about different senior care scenarios, gather as much information as you possibly can and start the process of completely understanding your own financial situation and possible future needs.  It sounds like a difficult task, but you will be amazed at how well you will do.  You just have to start.

Take your Time in Choosing a Facility.

Remember, no one can tell you what house or apartment to buy, or what college to attend.  In the end, these are your decisions.  Take the time to understand the differences between private-for-profit facilities, secular non-profit facilities and religious-based providers.  Visit as many facilities as you can.  Eat the food.  Chat with the staff and definitely talk with the residents.  Ask how many doctors are on staff at any given time.  How many registered nurses?  How is their physical and occupational therapy department?  See what social amenities are available.  Hang out.

If you think you like a place, go back a second time.  Eat again.  Talk some more.  There are many aspects to investigate.  Make sure you take a pad and pen.  And leave with every piece of paper they can give you, including a sample contract and a list of ancillary costs.  If they don’t offer them, ask.

Remember to Factor in all Costs.

In my experience, there are generally two main costs of long term care: an entry fee (if there is one) and a monthly fee.  These are usually based on the physical size and type of accommodation and vary with spouses or companions and levels of extended care, such as deals on eventual skilled nursing care.  In addition, there are ancillary fees that I mentioned above.  These are usually items like telephone, cable TV, incontinence supplies, medication packs, etc.  The list can be very long and can include items you think are covered by the monthly fee, such as meals or laundry.  Obviously, they can add up.

Once you’ve established what the costs are for several long term care facilities and you’ve charted your own income and worth, you can then project out into the future and see what is affordable for you.  No one has a crystal ball, so projecting is equal parts science and luck.  The prudent person will revisit the calculations whenever changes happen and make the appropriate adjustments, if needed.

This isn’t rocket science, folks.  But it does take work, work that is for your benefit.  And in the end, you’ll be glad you did it well in advance of when you need it.

Written by Guest Blogger Bill Fabrizio.

Bill Fabrizio is the author of The Senior Care Calculator,
www.seniorcarecosts.com It is a free website that assists people wishing
to make sense of the financial costs of particular long term care
facilities they are interested in and visit.  His website is an outgrowth
of experiences helping his mother choose a senior care facility.

Images Courtesy of Mattox andSvilen Milev on Stock.xchng.

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2 Responses to “No Crystal Ball? How to estimate your long-term care costs.”

  1. Quality recommendations and suggestions on why and how people need to plan for their long-term care.

    Regrettably, there is still an awareness about long-term care and planning.

    The original model of dying younger or having family, friends, or service organizations taking care of us is not practical.

    In addition, many people are challenged financially with regular expenses and planning for a “probability” maybe I will need it, maybe I will not allows people to delay and defer their planning.

    Professional advisers are helpful to encourage their clients to own long-term care insurance. So are those of us who focus and concentrate in this area. Why?

    We know the companies, the underwriting, and the nuances of what will be beneficial to individuals, partner/spouse, or work place LTC plans.

    There is also the fact that insurance carriers are allowed to be selective with whom they underwrite and offer LTC plans. People who are not in the range of good health will never qualify for long term care plans.

    This is why the earlier people own plans, both in premiums and the rating offered allows people to own more in coverage. Premiums are based on income and financial assets while working or in retirement.

    Continue to write on these topics.

    Raymond Lavine
    http://www.lavineltcinsurance.com
    lavineltcins@gmail.com

  2. mackenzie says:

    Thanks for the comment Raymond. We also appreciate hearing the perspectives of people within the business!

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