Friday, June 22, 2018

Do You Need Long Term Care Insurance?

Today, the average cost of a nursing home is $82,125 per year for a semi-private room, according to US News and World Report.   Generally speaking, except in limited circumstances, this cost is not paid by Medicare or standard health insurance, so many people, especially as they approach the retirement years, wonder if they should buy insurance to cover the cost.  The answer, of course, is "it depends".

What is a Nursing Home?

For the purpose of this article, we are going to define a "nursing home" as an institution that provides complete custodial nursing care of the elderly or disabled who are not able to live independently because of mental or physical condition. Medicare does not pay for nursing home care.

This is different than a "skilled nursing facility" that is attempting to improve the person's health and/or functioning so as to allow them to return home.  The facility may be the same but the function is different.  Medicare pays for up to 100 days of skilled nursing care in a year. 

Does a Nursing Home REALLY Cost over $82,000 Per Year?

While the $82,000 figure is an average, different facilities have different costs and the average cost in some states is far more than in others.  If you are in a low cost state you may not need as much, and if in a high cost state you'll need more.

How Much Is Long-Term Care Insurance?

According to the American Association for Long-Term Care Insurance, the average cost of a policy for a single person, age 55, is about $2,000 per year. This policy would pay $150 per day for up to three years.  If purchased at age 55, a couple would pay about $2,500 per year for benefits of $150 per day for three years.  If one member of the couple used all the days, then nothing would be left for the other.  To compare, if the couple waited until they were 60 to purchase that insurance, the premium would be about $3,400 per year. 

Is Long-Term Care Insurance Worth It?

The rule of thumb about ANY insurance is that most people are going to pay more in premiums than they collect in benefits.  If this wasn't the case, insurance companies would not make money and we all know they do.  When you buy insurance, you are paying the insurance company a fee to assume a risk, to turn an unknown into a known.  

I don't know if my husband or I will need nursing home care.  I do know that if we do need it, it will be expensive.  The insurance company knows the odds, ad they are going to look at me and my health history and determine how much time people like me spend, on average, in a nursing home.  They price the policy to make sure that we pay more than that.

The question is whether I need them to turn that unknown risk into a known premium.  Using the figures above, the policy will pay a maximum of $164,000.  If that 55 year old lives to 105, she will pay $100,000 for that insurance.  If she lives to 85, she'll pay $70,000.  Is it worth it?  

A rule of thumb is to buy insurance for things you can't afford to have happen.  I can afford to replace my cell phone so I don't insure it.  I can afford to pay $1,000 toward home repairs so I don't insure the first $1,000 worth of damage from storms.  I can't afford a trip to the hospital so I buy insurance to cover it. 

If all indications are that you will be able to pay $85,000 per year out of your assets, then long-term care may not be worth insuring. The thing to realize, especially with single people (whether never-married or widowed) is that by the time you need a nursing home, your other expenses will be minimal.  Your nursing home bill covers room and board, entertainment, transportation and more.  You won't need your car, you won't shop regularly for clothes or toys, and you won't be going out to restaurants.  Your house can be sold or rented out, and you will still get your Social Security and any pensions.  

The average nursing home stay is 835 days though the stay can be considerably longer for people with dementia and few physical problems.  Interestingly though, the average nursing home resident has a life expectancy of about six months when entering care.   Baby Boomers are estimated to have a one in four chance of spending the end of their life in a nursing home.  Those are the risks.  Can you afford them?

What If You Need a Nursing Home But Can't Afford It?

If you have reached the point that you need custodial care and you cannot afford it--there is no money there, then Medicaid will pick up the bill.  In order for Medicaid to pay your nursing home bill, your assets must be gone, or nearly so.  While some can be set aside for a spouse, your kids' inheritance must be spent before Medicaid pays.  Also, Medicaid looks at transfers from your estate in the last five years when determining eligibility, so if you are planning to give the money to the kids and then to let the government take care of you, make sure you get an early start.  

Maybe Your Kid(s) Should Pay for Long Term Care Insurance for You

If you have adult children and are comfortable discussing your finances with them, give them the figures and let them decide it long term care insurance is worth it, particularly if you are single.  If you do not have a spouse to worry about, then your long term care insurance is insuring an inheritance for your kids (assuming you don't outlive the policy). It isn't going to provide any benefit to you, because Medicaid will pay your nursing home bills if necessary.  Since they are benefiting, they can pay. 

On the other hand, if your kids include one with special needs who will be depending on an inheritance, purchasing long term care insurance could be part of your plan of long-term support.  

What do you think?  Is long term care insurance worth it?  Who should pay for it?  

Disease Called Debt

Friday, June 15, 2018

7 Cost Effective Ways to Help an Elderly Relative with Their Spring Clean

Today I'd like to welcome Sam from Moving Babies to Racing Towards Retirement.  Even though her expertise is babies and getting babies from place to place, she knows that babies are part of a family and that families look out for each other.  Today she is sharing with us some ways to help the older members of the family with spring cleaning.

Spring is a season most people enjoy. Additionally, it is the time of year most people thoroughly clean their homes, all because it is not too hot and thus you risk a heat stroke or too cold to throw all your windows open. As you busy yourself tidying your home though, it is essential that you do not forget that your mother or grandparent may also need some help cleaning. It goes a long way into making them feel cared for and helps you get a better understanding of their situation.

A clean environment is a key to good health especially since as people age their immunity weakens. You need to ask yourself, are they living in a clean and safe environment? Is there excess clutter that could be hazardous to their mobility?  Therefore, here are some cost effective tips that you can use when helping that elderly relative of yours tidy their home:

#01. Make A List and Prioritize

This one’s for free! When you get a busy spring cleaning, most people scrub down every corner of their house. However, the rooms and items that you use need to always clean. Instead of starting at a random point sit down and prioritize. Prioritizing is also essential because it allows you to allocate different activities enough time depending on their complexity or sensitivity. Additionally, you find when you have everything written down it is harder to forget one section of the house.

#02. Get Rid Of Clutter

Most houses have an accumulation of things that are not used by anyone but are also never thrown out. Unless something has sentimental value, if it is not being used it should be given away, sold, or thrown out. Decluttering creates more space in the house. Additionally, you will find that most of these knick-knacks were only collecting dust. You also need to keep in mind that the house is not yours and therefore do not get rid of anything without the owner’s permission.
Saving tip: If you can get your relative’s buy-in, you could even make some money by selling items that are in good condition but are no longer used.

#03. Come Up With A Work Plan

To adequately cover every inch of the house you need to have a plan. It will also partially involve allocating time to each activity. For example, if your loved one spends much time in their room, then it will need to be cleaned thoroughly than the places they rarely visit, like the attic. Also, when allocating time, you have to avoid having a rigid work plan. This way, you can comfortably accommodate any changes along the way.

#04. Figure Out Their Likes and Dislikes

People like to clean with certain detergents or in a particular order, and when you ignore this order, they may not be entirely satisfied with the results. Therefore, before you go shopping find out if the homeowner has any preferences. Additionally, do not forget to ask whether they are allergic to anything.
Saving tip: Make a list and buy everything at once, there are often coupons for cleaning products and this can bring the price down significantly.

#05. Consider Getting Help 

Unless you are a superhero, you will not manage to clean surfaces, do laundry, dust the carpets and shine the windows in one day.  On the other hand, you cannot spring clean for two weeks. Therefore, you might need to consider hiring some help or calling in some of your relatives. When choosing the people to help you, make sure you select people who can work around an older person to avoid petty conflicts.

#06. Do Not Exclude Your Grandparents in Your Cleaning Project

Older adults might be a bit slow as they work or they may not have the strength needed for heavy lifting. However, this does not mean you should exclude them.  Keeping in mind that this is their house, you need to involve them in every step of your plan, right from the organizing. You can give them a light task like making tea for the team, or sort the cutlery.

#07. Improve Their Air Quality

Spring cleaning not only leave the surfaces clean it also improves the quality of air in the home. However since you cannot do this every month, you can buy your relation a lightweight, inexpensive canister vacuum cleaner, which will make it easier for them to keep on top of the cleaning going forward. Additionally, if they spend much time indoors, get them an air purifier for mold as aging adults tend to be more susceptible to bronchial infections. With the addition of these two gadgets, you will not need to worry about the accumulation of indoor pollutants and allergens.
Saving tip: Do your homework, there are often specials and discounts offered for items such as purifiers and vacuum cleaners so don’t rush out and buy the first one you see.

Spring is a period of renewal, and a restored commitment to making a sheltered space for your older relative so that they can age at home with pride, independence, and happiness.

*Part of Financially Savvy Saturdays on brokeGIRLrich.*

Friday, June 8, 2018

Saving Money on a Beach Vacation

It is summer, and for many families, that means it is time to go to the beach.  My husband and I just spent a few days in Ft. Walton Beach Florida so I thought I'd pass along some money-saving tips.

Find Economical Lodging

If the purpose of this vacation is to go to the beach--to play in the sand, read on the beach, sleep in the sun or play in the water, don't waste your money on a fancy hotel room you are only in while sleeping.  Start planning early and explore different types of lodging:
  • Condominium or rental house:  The more people who are joining you, the better deal a condo or rental house will be compared to a hotel.  Most come with full kitchens so you can prepare your own meals--meals that are better for the kids than chicken nuggets and fries and which cost a lot less than full service restaurants.
  • Hotel rooms:  For couples by themselves an inexpensive hotel may be the best deal, especially if it comes with breakfast.
  • Airbnd:  Single travelers can rent rooms in people's homes for a fraction of the cost of a hotel room
With all of these, realize that the closer you are to the beach, the more you will pay.  A good strategy is to locate public beach access, and then find an off-beach hotel within a reasonable drive.  

In Ft. Walton Beach, the beach is on an off-shore island.  We stayed on the mainland less than five minutes from the bridge to the island and less than ten minutes from the public beach park (included showers and restrooms).  Our Comfort Inn was about what you'd expect from a Comfort Inn and it cost us about $170 per night.  Any hotels on the island were over $200 per night and those on the beach were over $300 per night.  Interestingly, on the weekdays we were there, the public beach was less crowded than the private beaches in front of the condos and hotels.  

Keep Food Costs Under Control

If you are staying someplace with a kitchen, use it.  You don't have to spend your vacation cooking elaborate multi-course meals but buy sandwich fixings, snacks, or something you can throw in the oven or crockpot.  

If you are in a hotel, if you have a refrigerator and/or microwave, don't be afraid to use them.  If dining out is an important part of your vacation, include it in the budget, and don't waste your money on fast food--stop at the grocery store and buy a loaf of bread, some deli meat and some fruit.  

Plan Ahead to See Low Cost Attractions

Much as you love the beach, unless you are willing to be burned to a crisp, time there must be limited.  Especially if you have kids, research free/inexpensive attractions in the area so you don't have time to pay $XXXX for the roadside park that has all sorts of fun stuff, at a high price.  You could even check to see if the local library has programs the kids could attend.  If the hotel has an indoor pool they can play there after you get done at the beach.  

While a beach vacation can quickly become very expensive if you let it, with a little planning you can have a good time and not break the bank.  
*Part of Financially Savvy Saturdays on brokeGIRLrich.*