Don Grady is a CPA and Professor of Accounting at National Louis University, Chicago
Recently, Sue and I had two of our close friends in need of nursing facility services be¬cause their loved ones were not capable of caring for them at home. The decisions to arrange for nursing home care were stressful enough to begin with, but in both cases there were added financial concerns.
In both situations, our friends had not arranged for long-term care insurance to cover the costs of the nursing home. In one situation, Medicare would not cover any of the costs for the nursing home because our friend was not hospitalized prior to entering. The cost for the nursing home was $150 per day, or $54,750 per year. In the other situation, Medicare did cover the first 90 days of care, but after that there was no coverage. The costs for that facility were $250 per day, or $91,250 per year. The families were devastated.
In an earlier column from May 20, 2010, I addressed the top five questions to ask about long-term care insurance. That article addressed the need for seniors to obtain long-term care insurance to cover the “gap” not covered by health and life insurance. The article also suggested how to find a reputable long-term care insurance provider. In our era, we find our¬selves with shrunken retirement funds and limited/fixed income from Social Security or pensions. Once the retirement funds are depleted, how do families find the financial re¬sources to fund uninsured stays at nursing home facilities?
Unfortunately, the burden often falls on the loved ones to fund the costs of their parents. In some situations, it may be possible to obtain a reverse mortgage on the home residence to provide the funding.
We would all like to think that we won’t need long term care, but historical stats suggest a high likelihood that 70 percent of those over 65 will need such care. Don’t get caught short – if you haven’t already looked into long-term care insurance, seek out a reputable provider before it’s too late.
• Send in your questions and ideas to: Sun Day, Frugal Forum Column, P.O. Box 7505, Algonquin, IL 60102, or, by email to: thefrugalforum@gmail.com.
