Medicare and retirement: Many Americans fail to plan for long-term care

Dear Toni: My brother recently had to move out of his house into an assisted living facility because he broke his hip and is unable to live on his own. The monthly cost of the facility is about $4,500, and his adult children are having to help him financially.

Is it too late to buy him a long-term care policy? He is 69 and, except for his hip issue, his health is decent. — Leslie from Tyler, Texas

Dear Leslie: Because of his health issues, your brother will most likely not qualify for a long-term care policy. And he will have to spend down his retirement and savings before Medicaid will assist in paying for his assisted living/nursing home care.

We are noticing more long-term care issues because many people are waiting until they are retiring and past age 65 to apply for a traditional long-term care policy. By then, the premium is often unaffordable for their retirement budget, or they cannot qualify because of health issues.

Americans need to know that the cost of long-term care is projected to rise, from an average nursing home cost of $115,000 a year in 2023 to more than $155,000 a year within 10 years, and to $207,000 in 20 years.

Assisted living costs less, with the 2023 average at $57,000 a year, projected to rise to $77,000 for 2033, and to $103,000 in 20 years.

The insurance industry has designed new products for Americans who are concerned about long-term care. Here are some options:

Traditional long-term care insurance: The younger you are, the lower the premiums will be. Look for a long-term care policy while you are younger and in good health.

Life and annuity policies: Many life/annuity insurance policies have a provision, or rider, for long-term care. You can receive a certain amount with your life/annuity policy’s face amount.

Aid and attendance benefits: Veterans Affairs can help with long-term care needs. The government made billions available to qualified veterans or their survivors for long-term care. An amount is added to the monthly pension benefit. You need to have a long-term care issue to qualify.

Medicaid: Check to see if you are eligible for Medicaid, though a person must first “spend down” their assets to qualify.

Over the next 10 years, 10,000 baby boomers per day will turn 65. Many of them think they have enough in their 401(k) to pay for a catastrophic illness and are not concerned with long-term care planning. They do not realize that in 20 years, when their health is failing, their savings, including 401(k) and other investments, could be wiped out because they failed to plan. Planning for long-term care is best done sooner rather than later.

Toni King is an author and columnist on Medicare and health insurance issues. For a Medicare checkup, email info@tonisays.com or call 832-519-8664.