Our grandparents rarely thought about assisted living. Options were few, costs of care were low, insurance was less restrictive, and loved ones expected to eventually become caregivers. It was normal to rely on family.
It was a different time.
Today’s care environment looks nothing like the past.Costs─and expectations─have changed. In 2017, the cost of long-term care rose three times faster than inflation, and can range from a low of $45,000 per year in Arizona to a high of $97,455.
Even more alarming, 40 percent of those aged 65 and older will need assisted living, with a length of stay averaging 892 days, according to Morningstar News. Ten percent will remain for five or more years.
Those costs add up quickly.
For most people, it’s not the move to assisted living they fear… it’s the cost. How can they afford it? Will they need to rely on loved ones for caregiving? It’s worrisome.
Here are four options for anyone seeking solutions for future costs of care while they are still in relatively good health and able to live independently. These retirement planning solutions are for those thinking ahead and won’t apply for those in need of immediate care.
1. Build up a significant retirement nest egg that’s robust enough to pay for extended assisted living.
No matter what kind of retirement lifestyle you’d like when the time comes, saving money for your future is critical for peace-of-mind. It opens the door to freedom of choice and options unavailable to those living on Social Security alone.
Those with a mortgage-free home and/or significant net worth often find it valuable to consult with an estate attorney, rather than relying on just their cash savings and investments. There may be options to leverage a trust, annuity or other legal methods to manage the future impact of health care costs on retirement savings.
Naturally, growing a nest egg becomes less of an option as we age, since it requires time to accumulate.
For those with less time to save and perhaps already retired, we have three more suggestions that are more practical. They are also suitable options for those with financial assets who want to protect these assets for spending on something other than long-term care.
2. Purchase long-term care insurance.
Similar to health insurance, long-term care insurance is designed to help cover costs of long-term care, including assisted living, skilled care and memory care. It may not cover an in-home caregiver, companion care, or assisted living that doesn’t meet certain criteria, so understanding details of the policy before and after purchase is extremely important. Limitations, exclusions and the maximum amount of coverage is dependent on the options selected when purchasing the policy.
The costs of a policy have risen sharply as health care expenses continue to rise and the senior population increases, making it unaffordable for many. It’s also worth noting that it’s become more difficult to qualify for a policy and policies themselves are becoming more difficult to find.
Long-term care insurance is an option most applicable to those in their 50s or 60s, since the cost of premiums rise sharply in our later years. For those in their 70s or older, still living independently but seeking something more immediate, these next two options may be ideal.
3. Move into a Life Care community.
As interest has bloomed in retirement communities that offer continued care on their campus (called continuing care retirement communities or CCRCs), a secondary type of community offering seamless care has emerged: the Life Care community.
These include more comprehensive levels of pre-paid or discounted care to complement or replace long-term care insurance. They also include guaranteed care and housing for the resident’s lifetime regardless of what happens to their finances. Economic downturns, catastrophic hospital bills or other elements outside of the resident’s control might absorb their finances, but they’ll always have a place to live and the care they need.
It’s an interesting way to protect one’s financial assets from the costs of future care, with the added benefit of living in a community focused on health and wellbeing. Because they want to keep residents out of the care centers, not in them, Life Care communities foster an independent, healthy lifestyle that is very attractive. It’s not just a long-term care solution, it’s a choice of lifestyle, too.
Residents must meet certain financial and health requirements to join, be prepared to pay an entrance fee comparable to the cost of housing in the area, and be able to manage normal tasks of daily living for themselves at the time they move into the community. Once they are a resident, of course, care is provided as needs change.
For those more interested in remaining in their existing home, this last option may be ideal. It’s an exciting choice newly available in the State of Arizona.
4. Join a Life Care at home program.
Offered by some Life Care communities, a Life Care at home program offers care benefits similar to a Life Care community when it comes to paying for the costs of long-term care but it is specifically designed for those who prefer to remain in their current home as they age.
These programs include a wellness coordinator to help the member remain independent and coordinate any needed services, and some of the same benefits as Life Care communities for health, wellbeing and independence. Like a community, the at-home program is focused on helping members remain in their own home safely and comfortably as needs change. Fall prevention and wellness are big components of the membership program, similar to the lifestyle offered at a Life Care community in many ways. It also includes the Life Care guarantee which assures that a member will receive benefits for the duration of their lives, even if one outlives his or her resources.
Both Life Care communities and the Life Care at home programs are regulated by the Department of Insurance in many states, and used to either complement or replace a long-term care insurance policy.
Sun Health offers three Life Care communities in Arizona and the state’s first Life Care at home program. To learn more about the communities or Life Care, please register for an upcoming workshop near you or call Jackie Lusson, our corporate director of sales, at 623-236-3767. To learn more about our Life Care at home program, Sun Health at Home, please register for a discovery seminar or contact 623-227-HOME (4663).
(Originally published April 3, 2018; last updated Jan. 11, 2019.)