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Tom Schrette and Alan Cash

Tom Schrette and Alan Cash

Dear Tom and Alan:Just got back from our tax preparer.

She is really pushing long-term care for my wife and myself. We’re not even on Medicare yet! Aren’t these things ridiculously expensive?

The CPA says this is the insurance we’re most likely to use. I’m 62, my wife is 59.

How much would it cost us?

Average Joe

Tom: There is no “average” cost, Joe.

The expense for long-term care coverage varies according to your age, health, location and the financial instrument you use.

We can definitely tell you the average cost of the services you might receive if you should need them.

For example, most people want to begin receiving help in their own home. The average hourly rate for home care in Napa is about $27.

Adult day care is an option that costs between $92 and $127 per day in our area.

Assisted living ranges between $4,850 and $6,000 per month in Napa.

For the facilities that also have a Memory Care unit (for Alzheimer’s patients), the additional cost can be as much as $1,150 per month. All of the above estimates are for 2017 from PayingforSeniorCare.com.

Al: The March, 2018, AARP Bulletin gives a nationwide look at long-term care.

For nursing home care, the median annual cost in Texas is $54,800; in Connecticut it’s $150,200. Whatever you do, don’t make an impulsive move to Alaska: the cost there is $292,000!

The article begins by pointing out that if you live to age 65, the odds are 50-50 that you’ll need the benefits of long-term care.

Tom: Just to clarify, Medicare does not cover what is termed “custodial” care.

You are limited to paid coverage only up to a total of 100 days of skilled nursing care.

The idea seems to be that you’re not going to get better, so someone else will have to care for you.

That “someone” is usually a family member, that’s why home care is so important. Some long-term care policies allow family members to get paid for providing care in the home.

Al: In the AARP piece by Ellen Stark, she points out that only 7.2 million Americans actually have long-term care insurance.

Also, there are fewer companies offering long-term care policies. In the 1990s, there were 100 companies; now there are barely 15.

Since you have to be in good health to qualify, many see it as a waste of money for something you may never use.

Tom: So, the new wrinkle in all of this is what they call “hybrid” policies. For example, a whole life policy that has a rider for long-term care benefits.

The premium is locked in, and the benefit goes to your heirs if you never use the long-term care feature.

Another is the annuity with long-term care benefits that works the same except requires a greater initial deposit.

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Submit questions to schrette@gmail.com or alancash@gmail.com.

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