PLANNING FOR LONG-TERM CARE

May 6, 2016

An Old, (Very) Wise Man . . . ?  (the surprising truth about nursing home costs in Michigan!

My dad is someone whom I consider, and the facts would seem to bear this out, a very wise and shrewd business man.  Particularly, in regard to the health insurance business.  He’s spent nearly 40 years working in the industry, grew his employee benefits business to over 225 employees, and is a nationally acclaimed speaker on various health insurance issues.  I personally had the privilege of working side-by-side with him for more than 20 years. 

The reason I mention this is that, a couple weeks back, when my dad was visiting us for Sunday dinner, he mentioned, very proudly I might add, that the long-term care insurance policy that he had (so wisely) purchased on behalf of my oldest niece “will pay a monthly nursing home benefit of $8,000 when she turns 60, in 2050!”  He then sat back, looking very satisfied with himself, and said, “not too many people will have a plan that pays like that, Jack, do they?!”  As I said before, my dad is, in my opinion, one of the wisest business men I know.  But, at the risk of bursting his balloon, I felt compelled to inform him a very striking reality.  So I asked him, “Dad, do you think that will get the job done in 2050?  In fact, do you think that will get the job done today?”  He indicated that, although it might not cover the entire cost in 2050, it should be close.  And, certainly it would cover the cost today!

Well folks, I’ve got news for you. Although I can’t truly predict what the costs for a nursing home stay in 2050 will be, I’m quite sure they will be substantially higher than they are today.  I then took my dad to the Michigan Department of Health and Human Services website to show him the 2016 “divestment divisor” is  $8,282 (which is the average monthly cost of nursing home care in Michigan according to DHHS. This number changes every January).  When my dad saw this number, you could almost hear the sound of his jaw crashing against the dinner table! 

The sad reality is that very few people are aware of the costs associated with nursing home care.  To make matters worse, according to the Centers for Medicare & Medicaid Services, at least 70% of people over 65 will need long-term care services and support at some point in their lives.
(Source: 2015 Medicare & You).  And, according to the Centers for Disease Control and Prevention, the average length of stay in nursing homes is 835—or roughly 2.3 years (Source: Nursing Home Care FastStats, last updated May 2014).  Startling numbers, aren’t they? 

Do the math!  $8,282/mo. X 12 months X 2.3 years = $228,588.20.  And, it appears that more than half of us will require some type of long-term care services or support during our lives.  Plus, Medicare generally doesn’t pay for long-term care, long-term care insurance is expensive (and often the benefit you purchase won’t do the job when you need it to—see my niece’s predicament above), and governmental benefit programs typically requires that a person have minimal assets in order to qualify.

However, there is hope!  With some planning, you can protect your assets and position yourself (and your family members) to withstand the brutal costs associated with long-term care.  My very wise father is reconsidering his plans for himself and family members as I write this. 

To do so, contact an elder law attorney to start the process now—before it’s too late.  And, if you have a loved one facing the panacea of long-term care now and haven’t planned, all the more reason to contact an attorney now.  There might still be a way to protect a large portion of your hard earned nest-egg.

REMEMBER:  We’re in this together . . . your family and ours!

More on this subject to come.