Just attended a “webinar” this morning on long-term care (LTC) coverage planning. What’s that, you ask? Well, basically, it’s planning to pay for any kind of assisted living costs. And, trust me, you’re very likely to need a plan here. 

First, some statistics:

• 70% of retirees will require some kind of assisted living
• Women tend to require assistance later in life and average about 3.7 years of need
• Men tend to require assistance sooner and average about 2.2 years

LTC isn’t just nursing home care. It’s needed when you lose the ability to do some (or all) normal daily activities like cooking, bathing, and such. So LTC usually starts with in-home care provided by relatives or spouses. As needs increase trained help is often hired to provide the necessary support. An assisted living facility (like a nursing home) is typically the last part of LTC. 

Most adults spend a year in the first group (in-home, no outside help), a year in the second (in-home, some outside help), and a third in a facility. So, to the extent that there is “good news”, it’s that the most expensive part comes in at the end. 

So how do you pay for that? Well, it depends. Medicare does NOT cover it. Medicaid CAN cover it if you’re dead broke. Insurance can cover some of it but, wow, it is both expensive and difficult to get if you’re in anything less than perfect health. Washington State is spinning up the “Cares Fund” that would cover minimal expenses for up to one year – but that only applies if you’re paying into it (via payroll tax) for the next ten years. 

So, dude, again – how do you pay for that? If you’re not broke (and don’t plan to be) and don’t plan to have insurance and the Cares Fund does not apply, well, you’re on your own. What you need to do is figure out the GAP between the income you expect in retirement (e.g., social security, annuity, pension, etc) and the cost of long-term care. You’ll want to set aside cash to cover that gap for at least three years if you’re a lady person and two if you’ve got the gentlemanly bits. As a couple that would mean a “gap reserve” to cover five years. 

It may be that you could sell assets at the time, like your house or something. That’s not a bad plan (it’s actually ours) but you should also model what happens if one of you (if there’s two of you) needs LTC earlier in life. You won’t want your spouse to loose the house in order to pay for your costs. 

In closing, here are a couple of links that can help you plan it out.

The first is Genworth and it will help you forecast costs in the future: https://www.genworth.com/aging…/finances/cost-of-care.html

The AARP calculator can help you figure out costs at different stages of LTC need: https://www.aarp.org/…/long-term-care-cost-calculator.html

Finally, if you’re lucky enough to qualify for Washington Cares coverage, here are the details: http://www.wacaresfund.wa.gov