The costs of long-term care are increasing every year, but most families do not understand what they will be confronting when it is time to start paying for care.

Too many people wait until they are in the middle of a crisis before they start trying to figure out how the world of long-term care works. This is a topic people do not want to discuss, and it’s a very expensive proposition.

Families can go broke quickly trying to provide for a loved one, and compounding this problem is most do not know the differences between Medicare and Medicaid, and what you must do to qualify. They also don’t know the differences between Home Care, Assisted Living and Nursing Home care; they don’t know what is and is not covered between public and private pay; and, most don’t understand the growing array of long-term care insurance, annuity and life insurance products.

People are warned to plan for the future over the course of their adult life, but we know the reality is too few actually heed the warnings and they don’t secure insurance or financial products that can address their future risks. Fortunately, there are solutions to help many of those people who failed to plan.

There are “point-of-care” financial solutions available to families that can help pay for the costs of care at the time that it is needed. One tool that is becoming more common is exchanging life insurance policy death benefits into a Long-Term Care Benefit Accounts that will pay for the costs of senior retirement living and long term care.

A life insurance policy can still protect your loved ones while you are alive. You bought it to protect them in case you died—but it’s important to realize the same policy can protect your family from certain tragedies brought on by insufficient financial means and/or the need for long-term care:

• You don’t need to become a physical or financial burden on your spouse or children
• You can avoid the physical and financial toll for you or family members by being forced into the role of a caregiver
• You can avoid the sudden disruption and resentments this will cause throughout your family
• You can stop the drain of income and assets that supports your family today and in the future

How to know when it is time for care

For many family members, they are acting as caregivers without realizing it. Either it can seem like a normal part of aging, or people are just not willing to admit that their ability to live independently is no longer possible, or safe. However, there are warning signs you should be looking for that will help you recognize when the time for professional long-term care has arrived:

1. Physical Deterioration: Look for signs such as significant weight loss, balance issues and falling, loss of strength and stamina, and other losses of “Activities of Daily Living” (ADL) such as ability to shower or toilet, dress, or eat independently.
2. Mental Deterioration: Do not blow off loss of memory or confusing names, dates and locations as just a “senior moment”. Cognitive deterioration is an important warning sign that you should be on the lookout for dementia and Alzheimer’s. These conditions can worsen quickly and can lead to many physical breakdowns and safety issues.
3. Lifestyle Deterioration: Is the home not being kept as neatly as in the past? Are things oddly out of place (a house plant in the fridge or pots and pans in the bathtub), or do you see signs of physical damage (the car crashed into a fence or the wall of the garage, burn marks on the kitchen wall from a flash fire)? Long-term care is both a matter of healthcare and safety.

How to pay for care

For the few people who prepared through savings, still have assets, or purchased long-term care insurance, the monthly costs could be manageable. But for those who failed to plan there is still hope with options that can be used to cover costs of care today. The three primary ways to pay for care are Medicare, Medicaid, or Private Pay through insurance, savings or assets.

1. Medicare is an “age based” program and will cover the first 100 days of rehabilitation care in a licensed skilled nursing facility upon direct discharge from a hospital.
2. Medicaid is a “means based” program, which means to qualify an applicant must meet both standards of medical necessity and be below asset and income levels, which in essence requires that the individual is below the poverty line. Applying for Medicaid can be a challenging process that requires the applicant to submit detailed medical and financial records. Medicaid is the primary payor for nursing home care.
3. Private Pay primarily comes from an individual and/or a family’s savings, assets, and income. It can also come in the form of long-term care insurance or the secondary market exchange of an existing life insurance policy for a Long-Term Care Benefit Account. People that are private pay can choose any form and location of care that they want such as home care and assisted living.

Buyer Beware

It is becoming more competitive to access the best long-term care providers, as 10,000 Baby Boomers are now turning 65 every day. Statistics show that 70% or more of people over the age of 65 will require long-term care services. People with the ability to afford private pay care are typically given preferential access to the best care providers and locations. In contrast, those on Medicare and Medicaid are given little choice as to where they can go, and for the most part will have to share a room with another person in a nursing home.

Families should do all they can today to prepare to fund long-term care, and to protect themselves from the financial costs, the physical and emotional stress, and the possibilities of legal liabilities. However, for those who failed to plan, the good news is there are long-term care funding tools that people can use to address immediate need for care today.

The key to surviving long-term care is for the family to recognize when the time has come, what the various forms of care are, and what are the best financial solutions to take on what can be the most stressful and financially difficult challenge of their lifetime.