Fact vs. Fiction: Long-Term Retirement Care

With the odds of a person over 65 years of age needing long-term care at some point in their life, creating an asset-based long-term care solution can help provide them with the financial security they need and deserve in their retirement years.  Without any sort of long-term care plan, many people will quickly drain their retirement savings in a few short years.

A Familys Earning Power

One of the most powerful assets a person has during their lifetime is their ability to earn a living.  When this power is gone, they must rely solely on income from a spouse, investments, or other sources of income such as an annuity.  

For example, if a working couple, age 45, earns a combined income of $250,000 per year, they have a future earning power of $5 million for a retirement at age 65.  If a 25-year-old couple earns $50,000 yearly, they have an earning power of $2 million by age 65.  This does not take into account any raises or other sources of income.  Even if a couple starts later in life, in just 5 short years, with a combined earning income of $250,000, the couple can realize an earning power of $1.25 million.  

For those who have worked hard and translated their earning power into financial security for themselves and their loved ones.  Unfortunately, without proper planning, a serious accident or illness or declining health can robe them of financial independence.

Interesting Facts Concerning Aging

  • At some point in their lives, people turning age 65 stand a 70% chance of needing some type of long-term care services and supports.
  • Medicare and most health insurance plans do not pay for long-term custodial care.
  • Most nursing home (67%) and assisted living residents (70%) are women.
  • The national median daily rate for a private room in a nursing home was over $250 a day in 2016.
  • According to the Social Security Administration, Medicare does not pay for long-term care services.

Separating Fact from Fiction

Fiction Medicare and Medigap will cover the cost of nursing home or assisted living care.


  • Medicare and Medigap insurance was never intended to pay for ongoing, long-term care.
  • Medicare pays for up to 100 days in a skilled nursing facility, with a 3-day minimum inpatient hospital stay for a related injury or illness.  Medicare pays all costs for the first 20 days.  For days 21-100, a co-payment must be paid for each benefit period.
  • Medicare does not cover long-term care or custodial care in a skilled nursing facility.
  • For short-term skilled nursing home care that follows a hospital stay, Medicare pays only about 12% of nursing home costs.
  • Most health insurance plans, including Medicare supplement policies, do not pay for long-term custodial care.

Fiction Long-term and nursing home care is affordable.


  • A nursing home currently costs an estimated $92,000 per year for a private room.  In some areas, this amount can easily go over $110,000 yearly.
  • The average length of a nursing home stay is over 2 years.
  • Assisted living facilities cost, on average, $43,539 in 2016 for a one bedroom.  The cost can rise if the patient suffers from dementia or Alzheimers to $70,000 per year.
  • Home health care aides average $20 per hour.  This equates to one aide working 3 hours per day for 21 hours per week at $20 per hour costing over $1,800 per month.

Fiction I will never need long-term services.


  • Almost 3 out of 4 people who turn age 65 will need long term care services and supports at some point in their lives.
  • Most of these residents are women.  Nursing home residents are, on average, 67% female and 33% male.  Assisted living residents are, on average, 70% female and 30% male.

Fiction If I cant afford a nursing home, assisted living, or home health care services, Medicaid will pay for it.


  • Medicaid helps with medical costs for some individuals with low incomes and limited assets.
  • As a joint Federal and state funded program, certain services must be included by the states in order to receive federal funds.  For example, individuals who qualify for Medicaid may get coverage for nursing home care and outpatient prescriptions drugs not covered by Medicare.
  • In order to qualify for Medicaid reimbursement, nursing home care must take place in a Medicaid-approved facility.
  • States vary of other services provided by Medicaid.  Some services are optional depending on the state where care is received.
  • There are federal poverty guidelines for income and assets owned.
  • There are state requirements for Medicaid eligibility.
  • Homes and cars are not included in determining Medicaid eligibility, but recipients must have low income and assets.
  • Federal estate-recovery laws require that each state recoups assets from the estates of Medicaid recipients.
  • This means that children who may have previously been set to inherit the family home will have the home sold and the proceeds used to pay for the care that their parents received.
  • For those who did not adequately plan for their financial needs during retirement, or for those who unexpectedly encounter hefty expenses that deplete their financial resources, Medicaid can be used as a safety net.

Luckily, there is a potential remedy for the dilemma of long-term care and the protection of assets:  long-term care protection.

A Potential Solution

Long-term care protection helps with the cost of daily activities needed by people with disabilities, or those who may suffer from a chronic, long-lasting illness.  For those who suffer from dementia or Alzheimers disease, long-term care can help with those additional costs.  

There are many different types of long-term care protection services available.  If you are interested in learning more about long-term care coverage and protecting your assets, discuss all of the long-term care options with a qualified financial planner.  By planning while you are still in good health and working, there are more options available for long-term care coverage.  This life insurance, long-term care hybrid solution can provide the exact type of coverage and continue to protect assets that have taken a lifetime to accumulate.

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