A Good Time for Some Long Term Thinking

It is difficult to think of much beyond COVID-19 as we near the end of 2020. It’s certainly a relief to have a vaccine approved and being distributed. But the numbers on the effects of the pandemic are staggering, and the benefit of receiving the vaccine for most people is still months away.

COVID-19 has had an overwhelming impact on the elderly, especially those in nursing homes and other long term care facilities. According to the Kaiser Family Foundation, as of the last week of November, COVID-19 had claimed the lives of more than 100,000 long-term care facility residents and staff.

An important part of retirement planning is considering the possibility of needing long term care. All it takes is a fall, a sudden stroke or other medical event to go from independent to dependent overnight. This can result in a crisis not just for you, but for those who may be called in to help arrange for your care.

Long term care planning requires considering how you would be cared for if you could no longer care for yourself. There are a variety of costs involved:

Financial: According to the Federal Long Term Care Insurance Program, the cost of long-term care can vary greatly depending on the type of care you receive, the place it is provided, and where you live. The national average cost for a semi-private room in a nursing home is more than $92,000 per year. And with inflation, that’s only going up. 

Emotional: Caregivers pay a high cost when a loved one changes from independent and strong to dependent and in need of personal assistance. It’s important to consider this if you are counting on family members to provide your care.

Physical: Caregiving is not just mentally stressful, it’s physically taxing. It’s critical to have the right training and equipment if you are planning to receive or provide care in your home. Home modifications may also be required in order to provide access to areas of the home that might be out of reach for someone with limited mobility.

Long term care planning means considering all of the options. Public programs currently cover 16% of all long-term care costs. These include:

• Medicare (limited to skilled care)
• Medicaid (income-based, nursing home care only) 
• Community services
• Department of Veterans Affairs (limited to certain veterans and their spouses)

Private options include:

• Family caregivers
• Voluntary and faith-based organizations
• Long term care insurance
• Personal savings and investments
• Reverse mortgages
• Continuing care retirement communities
• Life insurance, annuities and trusts

The Federal Long Term Care Insurance Program is one option available to federal employees to defray the costs of care if you eventually need it. FLTCIP policies will pay for care in a variety of settings, including at home. Other policies can be more restrictive. 

In 2019, the FLTCIP introduced version 3.0 of its plan. It includes a premium stabilization feature that is designed to reduce the potential for future premium increases.

It’s important to consider your potential need for long-term care at some point in your life. It pays to plan now to avoid a costly surprise later. 

Disclosure: Tammy Flanagan is under contract with LTC Partners, which administers the Federal Long Term Care Insurance Program, to provide informational presentations on retirement planning issues.