by Catherine McBreen
We recently completed research that says that 57% of households with $100,000 to $500,000 of net worth are concerned about a catastrophic health event, but at the same time, only 21% have invested in long term care insurance.
Granted, long term care insurance isn't the appropriate option for everyone, but I encourage you, regardless of your age, to start thinking about these issues. Most of us avoid it, and when the time comes, in many cases, your children can get saddled with decisions and issues they don't want to face.
One of the first things you should do is assess your own health as well as your genetic predispositions. I'm not a doctor and I do know you can and should overcome specific genetic tendencies through diet and exercise. (Some of us are much better at doing that than others). Although I have bouts of being healthy and athletic, I also have months where I abuse my body with junk food and lack of exercise. Since I am about to hit one of those birthdays that end with a big "0", I have done some thinking about, not only financial security, but what is going to happen in the remaining......who knows? ....years of my life.
I have a grandmother who lived to be 102. She kept her wits until she was 100. Gave up driving at 98 when she saw a news segment that a 96 year old woman had driven a car through a glass window of a restaurant. She said to herself, "What is a 96 year old woman doing driving anyway??....and then I realized I was 98." In contrast, I have another grandmother who is still alive, but has been suffering from Alzheimer's for 15 years. She is perfectly healthy at 88, but hasn't had a meaningful conversation for more than a decade.
So, I figure my chances are 50/50. My husband, knowing and understanding my family history, agreed with me when I said that I wanted to invest in long term care insurance now before I reached my big birthday in which the rates would probably start to climb. In my state, nursing home costs currently run about $5,000 per month. They vary across the country. With that knowledge in mind, and the assumption that they will only go up before I may have to draw on those services, I began my pursuit of long term care insurance.
I think I am slightly younger than many people who seek this insurance so finding it wasn't as easy as anticipated, but I did find it and got several quotes. I found a policy that I thought would cover what I need and I am paying money now every year....based on a gamble that I will need this. If I don't, then I can just be happy that I threw the money away.
But every household needs to make this decision for themselves. For some households, they will be better off just paying the costs of the nursing home or assisted care rather than buying insurance. For other households, those in the middle income to upper middle income families, the burden could be greater. Medicare does not pay for nursing homes or assisted living, despite what most people think. Medicaid pays for those services but you must first pay out all of your own money before you can qualify for Medicaid. Medicaid only applies to very low income households.
My father, who is a healthy 71 years old, worries about this every day. He has worked hard to save money and have a nice nest egg for himself and my mother. He would be very proud to leave money for his children. Yet he knows that if something happens to himself or my mother (in his mind it is always my mother because he believes he is too healthy to ever end up in a nursing home) he fears that everything he saves will quickly be drained (remember...her mother has been in a nursing home for 15 years.)
None of us can answer the question of what will be (Que sera sera...whatever will be will be...) but we each have to be honest enough to put a plan in place and be comfortable with our own plan. USA Today has some great information this week about discussing these issues with your parents. It says to focus on the financial, medical and legal issues...as well as long term care. They also reference a nationwide service sponsored by the U.S. Administration on Aging which helps people find professional services and offers advice. It is call the Eldercare Locator and is available at 800-677-1116.
Someday I will have to discuss this with my children. I am comfortable with my plan....but at the same time, the number before the "0" in my birthday isn't that big...is it?