Medicare doesn’t cover long-term care?
Posted July 31, 2022
Medicare— it’s a word that permanently takes up residence in your mind once you start approaching retirement age. Should you get Medicare Part A? Medicare Part B? Medicare Part C? or Medicare Part D? If you retire early, what will you do before you’re eligible for Medicare?
You know all the basics. You know the different parts of Medicare cover various services, including inpatient hospital stays, preventative services, outpatient care, prescription drugs, and more.
But one thing most people don’t fully understand is the difference between Medicare and Long-Term Care Insurance.
The National Institute on Aging defines long-term care as a “variety of services designed to meet a person’s health or personal care needs during a short or long period (Source: NIA).” In other words, Medicare covers medical costs like hospital stays, doctor visits, and prescriptions. However, when you’re discharged from the hospital or skilled nursing facility, you may still need assistance, and that’s when long-term care comes into play. “Most long-term care isn’t medical care. Instead, most long-term care helps with basic personal tasks of everyday life, sometimes called “activities of daily living (Source: Medicare).”
Understanding that Medicare does not cover long-term care is crucial when you approach your retirement planning, and you’ll have to create a plan to cover these future costs.
Prices for long-term care facilities in Hickory and the surrounding areas range from $3500 to $10K monthly. To help meet these costs, many financial advisors will try and sell you long-term care insurance, life insurance, disability insurance, and anything else they can. But that’s the difference between us. At Thayer Financial, we do not hold an insurance license nor sell insurance of any kind— but we understand it exceptionally well.
Insurance isn’t bad and commissions from insurance sales aren’t necessarily bad. The problem occurs when there is a conflict of interest between the advisor/insurance agent’s recommendation of products and how much those products pay them.
Long-term insurance policies pay really nice commissions, so it creates a natural conflict of interest for the agent to recommend those products (not to mention all the differing commission structures from different companies). In order to avoid these conflicts of interest, we started our fee-only, independent firm and work as fiduciaries one hundred percent of the time.
At Thayer Financial, we have a unique opportunity to advise our clients on the best way to fund this unknown future expense and discuss at what point it could make sense to purchase a policy. We understand that you may not need long-term care insurance, but you will need a long-term care solution.
This solution could come in several different forms, such as a spouse acting as a caretaker, an insurance policy, or a portion of your assets being set aside at retirement to help cover this expense. Whatever it is, we will discuss your options with you with transparency and honesty so that you can make the right decision for your family.
If you have questions about the difference between Medicare and Long-Term Care Insurance or want to know your options when it comes to preparing and factoring this into your retirement plan, we’d love the opportunity to talk with you.
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