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FYI Friday – Plan for the Unexpected

MOSCOW – Planning for the unexpected is always a tough topic, however, it is a necessity.

One in three individuals over the age of 65 will end up needing Long Term Care. This consists of nursing homes, assisted living, home health care, and adult day care. To qualify for any of these, an individual needs to be incapable of two out of the six daily living activities such as eating, bathing / personal hygiene, getting dressed, transferring, using the restroom, and mobility.

Edward Jones Financial Advisor, Beau Melton explained it is imperative to start planning for Long Term Care as soon as possible.

“That is the thing about the unexpected,” Melton said. “You don’t know when it is going to happen. So, it is important to have a game plan.”

There are two options individuals can use to plan for getting care. The first is you can save for it, however, this becomes problematic due to the rising cost of care. According to the Center for Medicare and Medicaid Services. In 2018, health care costs were rising by 5.4% a year and are projected to keep at that rate until 2028.

“A stay on average is three years,” Melton said. “At the end of the day, it can take a chunk out of your life savings by needing to spend money on that Long Term Care.”

In Idaho, today’s average cost of care is $4,640 a month. That is $55,680 annually and $167,040 for the average three-year stay.

30 years from now, with that inflation rate of 5% the total cost over the average three-year stay jumps to $721,944.

With numbers turning astronomical over time, the most common option individuals choose for Long Term Care is insuring against it.

“There are two types of insurance you can obtain,” Melton said. “Regular Long Term Care insurance, you pay your premiums and the amount can only go towards Long Term Care. Or, you can buy a Long Term Care Hybrid policy. You pay your premiums the same, however, you have a flexible payout.”

Melton further explained with the hybrid policy, individuals who do not end up using the care can get paid out similar to life insurance when they pass away. This ensures individuals’ money does not go to waste and gives them the option to pass along their life savings to their heirs, favorite charity, and more.

Worst case scenario, there is a third option to receive Long Term Care. Individuals can go on Medicaid, however, there are a few strings attached. There is a limited amount of countable assets users can have to their name with a five-year lookback. The applying spouse must have $2,000 or less, while the non-applying spouse can have $137,500 or less. This includes cash, real estate, investments, and more.

There is also a limited number of available beds in Medicaid facilities. So individuals in need may need to get on waitlists to stay local or travel out of state.

If you have questions on how to prepare for the unexpected, you can reach out to Edward Jones Financial Advisor Beau Melton at (208) 882 – 1234 or walk into his office at 609 South Washington St.  Suite 203 Moscow, Idaho 83843

“The author of this article and Edward Jones have an existing business relationship. This article is not an endorsement or testimonial of the services provided by Edward Jones Financial Advisor Beau Melton.”