Planning for Long-Term Care

According to the 2007 MetLife Market Survey of Nursing Home and Assisted Living Costs, a semi-private room in a New Hampshire nursing facility now runs about $88,695 per year.  The U. S. Department of Health and Human Services estimates that those of us who reach age 65 will have a 40% chance of needing nursing home care at some point in our lives, and 10% of those entering nursing homes will stay for 5 years or more.  Obviously, if not planned for, an expense this size would have a substantial impact on one’s retirement nest egg.  Remember that Medicare does not provide much help for these expenses, only covering medically necessary skilled nursing care for a short period of time after a hospital stay.  Other sources of funding these expenses include Medicaid, personal savings, and private long-term care insurance contracts.  Planning well ahead of time can make a big difference, regardless of which of these funding sources is ultimately used for care. 

The decision whether to plan on using personal savings to cover these expenses, should they occur, or to transfer the risk to an insurance company through the purchase of long-term care insurance is an important planning decision that depends upon a number of factors including the size of your nest egg, your goals, and the cost of insurance.  Long-term health care contracts have a variety of features that allow some customization to your particular needs.  In selecting long-term care contracts it is important to start your search focusing only on highly-rated insurance carriers.  Other factors to consider are the length of the exclusion period, inflation protection, premium guarantees, length of coverage, and what types of care are covered (home care, assisted living, nursing home).  We will continue to keep you informed of developments in this important planning area and we welcome your questions at any time.