Imagine living the rest of your life in an assisted-living facility instead of in a combine. While you’re stuck watching daytime television in a room shared with a stranger, your children are paying for your care by selling off tracts of land you pieced together over decades.
It doesn’t have to be this way. Long-term care insurance could be a solution.
On average, men who reach 65 can expect to live until they are 84, according to the U.S. Social Security Administration. Similarly, women who reach 65 can expect to live until 86. One in every four 65-year-olds will live past age 90, and one in 10 will live past 95. Have you considered what your quality of life will be if you live that long?
“Today, more than ever, people are leading longer lives,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance, based in Westlake Village, Calif. “When you live a long life the chances are, especially at older ages, you’re going to need the kind of care that’s considered long-term care.”
Often, such care is provided by a spouse or a family member. Yet in many cases, people face a situation where they have to pay for the care.
“Farmers don’t want to be a burden to their children, especially when they’re not living with you,” Slome says. “If they are, and they’re operating the farm, it becomes double duty.”
Forecast Expenses. The costs of long-term care can vary. The average cost of a nursing home is $5,627 per month, says David Repp of Dickinson Law.
Medicare won’t cover all of those expenses, either, according to the U.S. Department of Health and Human Services. The federal program will help pay for a stay in a skilled nursing facility, for hospice care or for home health care if:
- you have had a recent hospital stay of at least three days;
- you are admitted to a Medicare-certified facility within 30 days of that hospital stay; and
- you still need skilled care.
Even after meeting those conditions, Medicare will only pay for a portion of the costs for up to 100 days, so relying on the program to pay for your coverage is not a sustainable idea, Slome says.
Too often, farmers who need care after that period consider selling assets so they are eligible for Medicaid, Repp says.
“People with a lot of assets, such as farmland, inquire about qualifying for Medicaid for nursing-home costs so their children can inherit the farmland,” he says. “That’s a bad idea.”
The reason: Medicaid uses a five-year look-back for any transfers of assets without adequate value. Farm couples who take that route will have scarce financial resources for five years, Repp says, often requiring them to rely on the charity of others to get by.
“If the kids are really interested in keeping the farmland as their inheritance, [their parents] should plan on keeping that spare bedroom in their house available for you,” he says.
Long-term care insurance can mitigate these costs, Slome adds. “You need to have some coverage, but you don’t need the most expensive plan,” he says.
Select A Plan. Costs of long-term care insurance vary. On average, a 55-year-old man who obtains will pay $ 1,665 per year for coverage, according to the long-term care association’s 2017 price index. Shop around with several different companies for the best deal, Slome advises.
“The prices vary significantly,” he says. “It’s important to get comparison quotes or work with a specialist to find the best deal.”
Because you only purchase long-term care insurance once in your lifetime, it’s best to do it when you’re younger. Slome advises farmers to purchase a policy at 55 and then stick with the plan.
“As you age, the policy doesn’t change, but the cost is dependent on the age you are when you purchase it,” he explains. “You will almost never get a better deal purchasing coverage later in your life.”
Unlike with health insurance, you must qualify based on health criteria to obtain long-term care coverage. “Your health is the most important factor,” Slome says. “Even though you’re probably not going to need care for 10 or 15 years, it’s most affordable to buy coverage while your health is good.”