Military Officer - February 2008 - (Page 46) financialforum Part 1: LTC Myths Understanding long term care (LTC) is important but not always easy. Phil Dyer, CFP, dispels some myths about long term care so you can make the necessary decisions to protect your assets. W How Does Your State Compare? ■ For more information elcome to part 1 of a three-part series on the challenges of long term care. As baby boomers enter retirement age, there is a renewed focus on long term care as costs continue to increase. Unfortunately, there is a lot of misinformation surrounding long term care needs and costs and who pays for it. Myth 1: Medicare pays for long term care. on the cost of long term care in your state, visit http://longtermcare .genworth.com and click on What Is the Cost of Long Term Care? Click on Genworth Financial 2007 Cost of Care Survey. Medicare provides very limited long term care coverage, generally a maximum of 100 days of skilled facility care that does not include many assisted-living facilities and home health care situations. Myth 2: Medicaid will cover me. Many military retirees have too much guaranteed monthly income to qualify for Medicaid coverage in most states, although some surviving spouses might qualify. In addition, you have to spend down most of your assets to qualify for care, and the Medicaid “look-back” period for gifts has been extended from three to five years. This means you will be disqualified from receiving Medicaid coverage for a certain time if you give money away five years prior to needing care. This includes money transferred under the $12,000 annual gift tax exclusion. Myth 3: I’m healthy, so I won’t need long term care. According to a recent New Eng- might not be enough to cover long term care costs. The Genworth Financial 2007 Cost of Care Survey indicates the current national average costs for care are ■ home care: $28,435 a year; ■ nursing home: $75,345 a year; and ■ assisted-living facility: $36,829 a year. Remember, these are just national averages. The cost for nursing home care now is more than $100,000 a year in high cost-ofliving areas, such as the Northeast and California. Even a large portfolio could quickly be wiped out if both spouses need care. Myth 5: Long term care insurance is expensive, so we will wait until we really need it to buy it. This myth is partially correct. Long term care insurance is expensive, but waiting to purchase until you need it could be a costly mistake. Many financial experts recommend buying long term care insurance in your early 50s to mid 60s, while you still are healthy. Once diabetes, heart disease, or a debilitating condition is diagnosed, coverage will be astronomically expensive or impossible to obtain. Long term care insurance is one way to protect your assets, but it has lots of moving pieces. Part 2 of this series will explore some of the components of long term care insurance and offer some buying tips. MO — Former Army Capt. Phil Dyer, CFP®, is deputy director, Benefits Information and Financial Education. To find a financial planner near you, contact Garrett Planning Network at (866) MOAA-GPN (662-2476) or www.moaa .org/garrett, or visit www.moaa.org/financial center for other resources. PHOTO: SEAN SHANAHAN land Journal of Medicine study, approximately 50 percent of those 65 and older will need long term care. The average stay in a long term care facility is around three years. Myth 4: We have plenty of money in the bank and can afford to pay care costs out-of-pocket. Even a $1 million nest egg 46 MILITARY OFFICER FEBRUARY 2008 http://longtermcaregenworth.com http://longtermcaregenworth.com http://www.moaa.org/garrett http://www.moaa.org/garrett http://www.moaa.org/financialcenter http://www.moaa.org/financialcenter
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