Medicare Providers Blog and Resources

Guest Post by Dennis Ho The COVID-19 crisis has many people concerned about long-term care, whether they will need care for an age-related condition or one that strikes at random. If a person becomes too ill or disabled to care for themselves and needs long-term care, costs could add up quickly. According to the 2019 Lincoln Financial Cost of Care Survey, the national average cost for a home health aid is $25 per hour. Having an aid visit a few hours a week might be manageable, but if you need someone for 40 hours per week, costs could run $52,000 per year on average. According to the same survey, an assisted living facility averages $58,464 per year and a nursing home averages a whopping $110,595 per year. What most people do not know is that private health insurance and Medicare do not generally cover such care, and Medicaid will only pay when a person has depleted the vast majority of their assets, potentially leaving their spouse or family living in poverty.  The good news is that long-term care insurance (LTCi) remains a viable option. LTCi provides benefits to help pay for care if you need help with your daily living activities such as getting around, dressing, bathing or eating. LTCi offers the flexibility to pay for care without burdening one’s family, physically or financially. And because people who need long-term care get care on average for about three years, having insurance can mean protecting hundreds of thousands of dollars of your hard-earned retirement assets.  When you purchase a policy, you decide on the monthly benefit amount you’d like to receive if you need care and also a total benefit pool. For example, you might choose a policy that pays up to $6,000 per month for care with a total pool of $216,000. If you qualify for benefits, you can draw up to the monthly amount until your total benefits are exhausted. In the policy above, this means you could draw up to $6,000 per month to pay for care. If you used this full amount every month, you would have three full years of coverage before the $216,000 was exhausted. If you used less in any month, the difference would remain in the benefit pool and you could use it in the future. To help people learn more about long-term care insurance and to get a sense for the cost, Saturday Insurance offers a free online long-term care insurance assessment that’s available here. Shopping for coverage If you’re interested in exploring insurance, LTCi is available all the way up to age 79. Here are some tips to help you find coverage that’s right for you: Assess your coverage goals. How much does care cost in your area? What are your goals for insurance: Do you want maximum coverage so you could afford a nursing home or just basic coverage that will pay for home care? There are a range of insurance products available, so having a clear sense for your goals will make it easier to assess which products fit and which don’t. Set aside a clear budget. It’s easy to be scared into buying as much coverage as possible, but insurance won’t do you any good if you can’t afford to keep the policy. Also, you want to keep enough funds to support other retirement needs. A good rule of thumb is to spend no more than 10%–15% of your retirement savings on LTC insurance. Be open to a range of solutions. The two most popular types of LTCi policies are “Traditional Policies” and “Hybrid Policies.” The long-term care benefits work the same way, but how you pay for the policies, what benefits you receive if you don’t need care, and various other guarantees are different. Which one is right for you will depend on your personal situation and preferences, so make sure to explore both initially. This will give you the best chance of finding the right coverage for your situation. Related to this, make sure to work with an independent agent that can show you multiple options and not one that only offers products from one insurer. Buy from a reputable insurer. Since you might hang onto your LTCi policy for 30 years or more, it’s worth reiterating that you should only purchase from reputable and financially strong insurers. Don’t drag your heels. Long-term care planning is one of those topics that’s easy to put off. Yes, waiting a year or two probably won’t change the price dramatically, assuming insurers leave their current pricing unchanged. However, that’s a big assumption. Due to low interest rates and concerns about the risk, insurers across the industry have been raising their prices over the past few years. Buying earlier will give you the best chance of locking in the lowest prices. In addition, underwriting is fairly strict. If you develop certain health conditions, insurance might not be available at any price.  Perhaps the most important thing to know about LTCi is that it can be incredibly valuable for individuals and families in that the right policy will allow them to make their own decisions about how they will be cared for when help is needed. Dennis Ho is a life actuary and chief executive of Saturday Insurance, an independent, online insurance agency that helps people shop for life, disability, and long-term-care insurance. Prior to co-founding Saturday Insurance, Dennis spent 20 years in the insurance industry in a variety of actuarial, finance and business roles. He has been a contributor to Humble Dollar, Kiplinger, and other publications.

Guest Post by Lucas Siegel According to the U.S. Department of Health and Human Services, approximately 70 percent of baby boomers will require some form of long term care services at some point in their life. Whether this applies to you or a loved one, it's important to be prepared. To help you understand what costs you should expect and how you can cover these services, I've compiled a helpful guide on how to afford long term care. What is long term care? Long term care refers to a variety of services to help meet a person’s health or personal care needs when they are no longer able to live independently. Long term care may be warranted if an individual is unable to perform the following  six basic activities of daily living safely on their own: Eating — The ability to eat without assistance Bathing — The ability to clean oneself through hygiene activities such as showers, baths, shaving, and brushing teeth Getting dressed — The ability to change clothes without struggling with buttons or zippers Toileting — The ability to get on and off of a toilet without assistance Continence — The ability to control bladder and bowel functions Transferring — The ability to walk independently or move oneself to a mobility aid such as a wheelchair, walker, or scooter If an individual is unable to perform at least two activities of daily living, the U.S. government considers someone to be chronically ill which may warrant the need for long term care. There are several options available for long term care, including in-home care or assisted living facilities such as a nursing home. Why is long term care important? In-home care by family members may be enough for individuals who need minor assistance with daily activities, but people with more complex needs may require support from nurses and other caregivers. In these cases, long term care becomes essential to help the individual overcome daily challenges that arise from their ongoing health condition or disability. How much does long term care cost? The cost of long term care will vary by location and the unique needs of the individual, but on average the price is about $4,000 per month with state averages ranging from $2,844 to $9,266 a month. On an annual basis, this means long term care expenses total around $48,000 a year which is substantial for most families or individuals.  What’s even more concerning, is that the cost of residence in an assisted living facility has increased significantly since 2004. In 2004, the cost of residence in an assisted living facility was only $28,800 compared to the $48,000 in 2019. For those who want additional privacy, the cost of a private room nursing home jumped from $65,185 in 2004 to $102,200 in 2019. While the cost of home care hasn’t skyrocketed, the price has increased in this timeframe and the added costs are notable. How can I pay for long term care? The significant cost of long term care presents a challenge to those who will need it. To help you determine the best way to pay for long term care, we’ve provided several popular options: Savings and investment returns If you have enough money from savings or investment returns to cover the cost of long term care, that will be your easiest option. However, as of 2020 one third of Baby Boomers currently in, or approaching retirement have less than $25,000 set aside which wouldn’t cover even a single year of care. If you’re young and healthy, start saving early and aim to have at least $1 million by age 65 to cover all retirement expenses including long term care costs. Long term care insurance Long term care insurance may also be known as assisted living insurance, but both refer to a policy that is used to cover long term care costs if you end up needing them when you get older. It’s fairly uncommon, with only about 3 percent of Americans utilizing this option due to its high premiums.  According to Dave Ramsey, the average annual premium for this type of policy is $2,727 per year. This will vary by age and health of the policyholder, but the insurance works by awarding you a daily amount (typically $160 per day) that is used to cover long term care expenses should you ever need them. It’s important to note that there is typically a three-month waiting period from the time you need care until the coverage kicks in, and most insurers usually restrict coverage to between two and five years. Rent or sell a home If you have a home but need to move to an assisted living facility or into the home of a family member serving as a caregiver, you may consider renting or selling your house. The large lump sum you receive from selling can go a long way towards covering long term care expenses, but keep in mind you’ll also have to pay closing costs that may diminish your return. If you’d prefer to hold onto your home but will not be using it, you could also rent it out through popular rental services such as Airbnb or with the help of a property management company. This solution is completely turn-key due to the need for ongoing maintenance, so make sure to set aside a portion of the money you receive to cover these regular costs. Reverse mortgage If you’ll be utilizing an in-home caregiver or have a partner who will continue residing in the house after you’ve moved into a long term care facility, a reverse mortgage can be used to cover costs. A reverse mortgage works by having the homeowner borrow money against the home’s value — which is paid back after the owner decides to sell. The downside is that reverse mortgages also come with accumulating interest and fees in addition to the original borrowed amount that must be paid back when you sell. Sell a life insurance policy Many people are unaware that they can sell their life insurance policies to cover long term care and other retirement expenses. This is done through a process known as a life settlement.  Essentially, eligible seniors can work with a life settlement company that specializes in this process to help find a third-party buyer who will purchase the policy and award you with a lump cash sum. Upon completion of the deal, you’ll receive a large cash sum that can be used as you see fit and the third-party will assume all maintenance costs including monthly premiums until the original policyholder passes, at which point they’ll receive the death benefit amount. This is ideal for seniors with financially stable relatives, as it enables them to independently cover long term care expenses without sacrificing assets such as a home or requiring financial assistance from family members. Life settlements are typically reserved for individuals at least 80 years old, but younger individuals who require long term care may be eligible for a viatical settlement. Viatical settlements are reserved for individuals with a terminal or chronic illness. As noted earlier, the U.S. government considers someone to be chronically ill if they cannot perform two or more activities of daily living — meaning a chronically ill individual who requires long term care may qualify for a viatical settlement. Lucas Siegel is the founder and CEO of Harbor Life Settlements, a business that helps seniors discover the value of their life insurance policies by educating and connecting policyholders with investors to make life settlements fast, affordable, and transparent.

Guest Post by Kaylynn Evans According to a recent survey from the National Alliance for Caregiving and AARP, approximately 43.5 million adults in the United States serve as caregivers for elderly parents or children. Roughly 80 percent of that number are caregivers of people older than 50. One common denominator among all caregivers is that it can take a financial toll, but this can be lessened if you plan accordingly. Below are five key tips to help manage the financial aspect of caregiving for both you and your aging parents. 1. Make sure you have a Power of Attorney (POA) Once your parent’s health starts to decline, it’s important that another trusted family member can make financial decisions for them. There are many types of POAs, but the one you want is a Durable Power of Attorney. This would assign you the responsibility to manage all aspects of your parents’ financial and health matters. Some states require you to notarize power of attorneys, so be certain to check your state laws or consult with an attorney on this. 2. Plan for your own financial future You don’t want to neglect your own financial health while caring for your parents. Setting up your own retirement plan should be just as important as making sure your parents' financial needs are being met. Make sure you’ve set a budget and carefully monitor your expenditures, especially if you’ve had to give up a job to help take care of your parents. This is not the time or place to take on additional debt. You should have an IRA or 401k and consider long-term care coverage for yourself. 3. Have a clear understanding of their long-term care coverage Long-term care coverage pays for expenses not covered by traditional insurance and Medicare. This would include costs like long-term stays in a nursing home or a skilled nursing facility. Before coverage kicks in on most of these policies, the insurance company wants to see a “triggering” event. This would be a time when the insured can no longer perform routine daily tasks and would trigger the insurance to kick in and become active. Make sure you’re clear on what qualifying events or symptoms need to be present, especially with cognitive impairment. 4. Make sure your siblings are on board One of the most common causes of sibling resentment stems from caregiving for an elderly parent and managing their finances. It’s important to sit down and have a conversation with your siblings and be clear on who will do what. Some caregivers use a Caregiver Agreement that will stipulate who will care for the parents and what kind of monetary compensation they should receive. Try to plan doctor visits and any visits with nursing homes or assisted living homes with your siblings. It’s always a good idea to have more than one person on these visits to cover questions and make sure you’re all on the same page with the information you’ve received. Planning regular times to communicate with your siblings can help avoid any miscommunication frustrations and ensure that everyone is on the same page with your parents caregiving and financial management. 5. Plan for Medicaid According to Medicaid.gov, “12 million people are 'dually eligible’ and enrolled in both Medicaid and Medicare, composing more than 15 percent of all Medicaid enrollees.” Part of preparing for Medicaid coverage to kick-in means “spending down” what you already have. What is a Medicaid spend down? Geoff Williams, contributor to the US News Money website shares, “A Medicaid spend down is a financial strategy used when an individual's income is too high to qualify for Medicaid. To be accepted into the program, some of the individual's income must be spent down to ensure his or her income is low enough to qualify for Medicaid.” Guidelines vary by state, but one consistent requirement is that you submit your bills that use up the spend down to Medicaid for verification that you have met their requirements. Besides medical expenses and costs, some states will allow you to payoff accrued debts such as mortgages, automobile, or credit card debt. To help you navigate this complex process, find a planner that specializes in Medicaid coverage. Finances can be a source of frustration and stress, but if you plan accordingly by following these steps, you can ease a lot of those worries. Kaylynn Evans is the executive director of Vineyard Bluffton, an assisted living community opening in coming months in Bluffton, South Carolina, specializing in care for those suffering with memory loss. Kaylynn has more than twelve years of experience in healthcare, with nearly ten years of specialized experience in dementia care.