Americans over 65 require over $18,000 worth of medical care annually, and that number can expand enormously if the patient suffers from certain chronic conditions including dementia. These often require daily observation and permanent residence in an assisted-living facility or nursing home, at an average cost of over $43,000 and $82,000 per year, respectively. Meeting these financial demands requires some savvy, though there are plenty of methods available to pay the bills. Here are some suggestions to get you and your loved one on the right track.
Do Your Research
One of the first things you’ll discover is that Medicare does not cover long-term care, but only short-term treatment. That leaves you in a bit of a bind as government benefits won’t be much help unless you fall under a certain income threshold. How difficult financing is depends largely on which type of care your loved one requires as the prices can vary dramatically from the low end of the scale to the higher end with more expensive solutions becoming more likely as your loved one advances in age.
Look Into Home Care
Remember that aging in place is an option, and usually the patient’s preference as it allows them to remain in the home where they’ve spent so many years. There are wide variety of home care services that make this easier, beginning with home health aids, who assist with everyday chores that often prove difficult for the elderly including cooking and cleaning. There are also senior centers and adult day care facilities for passing the day or weekend under supervision. A case manager would be able to recommend the appropriate options for your family.
Contact Your Insurer
Do this now before your loved one has been diagnosed with any chronic illnesses, otherwise they will not be eligible for long-term care insurance. Such policies are expensive, as befits the rising cost of assisted living facilities and nursing homes, and may only pay up to a certain amount of days as a resident, however, they also can be used to pay for home care. The personal finance gurus at Investopedia recommend shopping for such a policy between the ages of 45 and 65 as part of an overall retirement plan.
Save Smart
Speaking of retirement plans, long-term health care should be taken into account when formulating an investment strategy for your loved one’s golden years, and there’s a lot more going on than the traditional 401(k). According to a writer with the investment experts at Motley Fool, SEP-IRAs give the self-employed more power over their financial future through higher contributions, while Roth IRAs give you a tax break after you withdraw money in retirement rather than while you are paying in. Health Savings Accounts, as the name implies, are designed specifically with medical expenses in mind.
Invest Wisely
There’s no reason to stop at IRAs, as financial managers always sing the praises of a diversified portfolio. To that end, an investment specialist with personal finance website the Balance has compiled a list of four retirement income funds from heavyweights Vanguard, Schwab, Fidelity and John Hancock that offer greater flexibility, though without any guarantees and greater fluctuation in the value of your assets. They offer monthly or yearly payouts, usually around 4 percent, though rates can vary for some.
Knowing the long-term care options and how to finance them, you’re now ready to make some crucial decisions regarding the welfare of you or your loved one. Remember to communicate openly with your family and caregivers to ensure a better future for everyone.
Ms. Bridges is the creator of AgingWellness.org, a website that aims to provide health and wellness resources for aging seniors. She’s a breast cancer survivor. She challenges herself to live life to the fullest and inspire others to do so as well.
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