How to Plan Ahead for the High Costs of Long-Term Care

We’re all living longer, and this means many of us will require long-term care such as nursing-home care or in-home services. The costs of these services can be overwhelming, but you can prepare for these financial demands with careful planning.

What’s covered?

Although Medicare does cover long-term care to a certain extent, this coverage is limited. Generally, Medicare only pays for about three months of nursing-home care immediately following a hospitalization, and copays may apply.

Medicaid will cover some long-term care costs, but to be eligible you have to exhaust virtually all of your personal resources. This could create complications for your spouse, who may have fewer assets and/or less income to live on if you need to be cared for in a nursing home.

Do you need insurance?

Bypassing long-term care insurance might be the right choice if you have a lot of money (in which case you can afford to set aside enough money for years of care while still leaving enough to support a spouse), or if you don’t have much money at all (in which case you’re likely to qualify for Medicaid soon after entering a nursing home).

But if you fall somewhere between these two extremes, you may want to consider long-term care insurance.

Determining what kind of policy to buy can be a major challenge, because the cost varies dramatically depending on your age, the amount of coverage and the features included. Discuss it with your advisor, who will help you select the option that’s best for you.