As we age we typically require additional medical care and assistance to complete day to day tasks. With the average life expectancy pushing ever higher, we can now plan on living longer. Living, however, costs money, particularly if it involves paying for a long-term care facility or assisted living home. With the recent recession not far from our minds and the fear that the Social Security system will fail, long-term care estate planning has become even more important.
Financial planning for your golden years should include the possibility that you will need to pay for a nursing home or similar facility. As of 2011, the average stay for a semi-private room at a nursing home ran almost $75,000 a year. At that rate, a modest income earner’s life savings can quickly be depleted. Federal programs such as Medicare or Veteran’s Administration assistance may cover some of the costs associated with long-term care; however, qualifying can be complicated and they usually will not cover all of the costs.
One estate planning tool that many people choose to use is long-term care insurance. In the past several decades, long-term care insurance policies have significantly improved and the rates have become somewhat more reasonable. When reviewing policies, be sure that you clearly understand what is, and isn’t, covered. In addition, be sure you are clear on what the maximum yearly and/or lifetime limits of the policy are.
Regardless of what tools and methods you use, the important thing is that you create a long term care plan within your overall estate plan.
Stephen A. Mendel, Estate Planning Attorney
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