Senior News: Think about how you will afford long-term care

Mary Kaye Dolan-Anderson is director, Dutchess County Office for the Aging.

There is good news and bad news when it comes to planning for end-of-life needs here in the U.S. The good news is 81 percent of middle-income baby boomers have taken at least one detailed action to prepare for their passing, according to a study by Bankers Life & Casualty. This would include making funeral arrangements, identifying where they would like to be buried, purchasing life insurance to cover burial expenses and creating a will.

The really bad news is 72 percent of those same baby boomers have no plan that anticipates their long-term-care needs. Most baby boomers seem to be in a state of denial about their future need for long-term care and mistakenly think Medicare will pay for long-term-care services. They estimate their total cost for health care in retirement will not exceed $50,000.

In reality, a study by Fidelity Benefits Consulting found the average couple turning 65 today on Medicare will pay an average of $220,000 in out-of-pocket medical costs before they die. Those costs include premiums, copays and deductibles. On top of that, about two-thirds of those 65 and older will have some long-term-care needs at a cost averaging $50,000 per person.

Although baby boomers do expect long-term care to affect their finances, they estimate the annual cost of nursing-home care to be about $47,000, while the actual yearly cost is over $90,000.

There is even more bad news for those considering a long-term care insurance policy to protect some of their assets. As costs and payouts continue to rise, qualifying for insurance will become more difficult and expensive over the next few years.

Some companies have already begun using gender ratings (insurance will be more expensive for women as they live longer) and requiring more tests and screenings during the application process.

Right now, nearly half of all long-term-care services are paid for by Medicaid, the state and federal program for the low-income and disabled.

Congress is currently working on a “plan for the establishment, implementation and financing of a comprehensive, coordinated and high quality system that ensures the availability of long-term-care services and supports for individuals in need of such services and supports.”

If you are one of the 76 million baby boomers who will be reaching retirement age over the next decade, the time to start having the conversation about how you will pay for you and your spouse’s long-term-care needs is now.