"Get Your Finances Ready for Retirement"-Long Term Care
Monday, February 02, 2009SUZANNE PRATT: Americans are living longer. But the older you get, the more likely it is that you won't be able to live independently. That's why long-term care is something everyone should consider in their retirement planning. So tonight, as we continue our series "Get Your Finances Ready for Retirement," Joe Collum looks at the many forms of long- term care.
JOE COLLUM, NIGHTLY BUSINESS REPORT CORRESPONDENT: At age 88, Leo Gerber is still the life of the party and although he suffers from emphysema and cardiac problems, he says life has never been better for him and his wife Nettie.
LEO GERBER/RETIREE: You can't live here unless you're happy. If you want to live a happy life, this is the place.
COLLUM: This place is the Court at Palm Aire in Pompano, Florida, a long-term care facility. Although many associate long-term care only with nursing homes, it can also include being cared for at home by a health aide or a relative; an adult day-care program; or living in an alternate setting, like an assisted-living facility. Seniors reach the point of needing long-term care at different times, says Pernille Ostberg, president and CEO of Matrix Home Care.
PERNILLE OSTBERG, PRES. & CEO OF MATRIX HOME CARE: Typically it's the 70s, 80s, when one isn't as capable of taking care of everything in their home as they used to be, cutting the lawn, cleaning the pool, all the grocery shopping, all the maintenance, all these things to think about.
COLLUM: Long-term care can be an expensive proposition and many people think that when the times comes, it will be paid for by Medicare. But if you are one of those people, think again.
KATHRYN VOTAVA, PRES. & FOUNDER, GOODCARE.COM: Medicare generally does not cover nursing home costs with the exception being a rehabilitation stay. So sometimes people get a little confused and say, well, my grandmother went into a nursing home and Medicare covered it. Well that was short-term for a month or two after she broke her hip. But for long-term chronic care in a nursing home, you're absolutely right, Medicare does not cover that.
COLLUM: Medicare also does not cover many other long-term care costs, which can be daunting. The average price to have a home health aide come to your home is about $19 per hour. Assisted living and nursing home care are far more expensive, says Emily Brandon of "U.S. News & World Report."
EMILY BRANDON, BUSINESS REPORTER, U.S. NEWS & WORLD REPORT: A private room in a nursing home is likely to cost about $76,000 a year. That's the national average. It varies from state to state, but that's about $209 a day for a nursing home.
COLLUM: Finding a good long-term care facility on short notice may not be easy. For that reason, many people who expect to need long-term care at some point choose to live in a continuing care community which guarantees them care at various levels, sometimes at no extra cost. Alan and Joy Turner went that route by moving into an apartment at one such community, La Posada, in Palm Beach Gardens. To get in, they paid a lump sum of $500,000, 90 percent of which will eventually be returned to their estate. They also pay a monthly charge of $4,700 for their apartment, meals and a variety of programs. Because Alan has Parkinson's disease, Joy Turner says it's worth the price.
JOY TURNER/RETIREE: If, for instance, my husband were to have to go to assisted living, I could still keep my apartment and it wouldn't be any more.
COLLUM: The Turners and the Gerbers were able to cover their costs by selling their previous homes. But if a home sale does not generate enough cash, long-term care expenses can quickly deplete a person's retirement savings. Having long-term care insurance is one way to avoid that, but it's not cheap. And in our next segment, we'll see what you need to consider before buying a policy. Joe Collum, NIGHTLY BUSINESS REPORT, Palm Beach Gardens, Florida.
