You simply can not afford to grow old in Maryland – not with what it costs for long term health care i.e. assisted living or nursing home care. That is unless you do a heck of a lot of financial planning now, hit the lottery, or work until you die. One is not desirable, one is not likely, and one seems difficult. But you have to do it because nobody else is and the crisis is getting worse.
Every year Genworth Financial, Inc., a huge insurance conglomerate, puts out a study of the long term health care costs on a state-by-state basis. The results for 2015 are in for Maryland and the picture is not rosy. The average cost for private nursing home room is $110,230 annually and is expected to grow at a rate of 6% each year! A semi-private room averages $101,379. And these are statewide averages. If you can get into a nursing home down in southern Maryland, what's known as the California area in the study, the average nursing home cost is $77,015 for a semi-private room. But as southern Maryland is one of the fastest growing regions of the state, that cost is likely to soar as well. Given that the average nursing home stay is three years for men and five years for women, you can see the small fortune that is necessary to meet these costs. For example, in my mother's case, had she survived her cancer and had to go into a nursing home, her modest estate would have been utterly eaten up by health care costs in no time.
So you think that you will just stay in your home and rely on family, friends, and perhaps a home health aide. Good luck with that. Having been through that process recently with a family member it is very hard work, has a ton of stress associated with it, and can be risky if you don't get a loving and caring home health aide. The average cost for home health aide, someone to help those who live in their own homes instead of residential care facilities, is $45,760. Since you are likely to need these services for longer than the typical nursing home stay, these costs too can add up to the equivalent of another four year college tuition or more. So what is the answer? Is there an answer? The general thinking is that a multi-prong approach gives the greatest chance of being able to afford quality health care while preserving wealth for your family's future.
One, save more money.
Not an easy task for sure. Yet with improvements in health care in general, people are living longer and able to work later in life. The idea of retiring at 60 or 65 is giving way to working for 10 or more years longer. So the more you can earn, theoretically the more you can save, and therefore have more to use when the income stops. Work with a financial planner to increase and protect that wealth.
Two, buy long term health care insurance.
Buy as much as you can afford from as reputable a company as possible. Insurance companies themselves are struggling with long term health care policies. Some companies are even choosing to discontinue offering them as the cost of claims made against them is exceeding the pool of money paid into the funds. But you can still find companies that are offering these types of coverage. The earlier you purchase, the lower the premium. As usual, the key is to shop around.
Three, consult with an elder law attorney.
There are perfectly legal tools available to the consumer to allow them to preserve much of their acquired wealth and still qualify for Medicaid coverage to pay for nursing home care. You do not necessarily have to get rid of everything and impoverish yourself in order to qualify for Medicaid. Of course, if your are a high net worth individual or couple, or even upper middle class, these options may not be for you. But for the regular guy/gal, who has worked hard all their life, tools and methodologies such as purchasing an annuity, retitling assets in your spouses name, pre-paying funeral expenses, and even using an irrevocable trust can preserve assets and income while still qualifying for Medicaid coverage. But it is a tricky landscape to try and navigate and one typically benefits from the advise of a qualified elder law attorney to explore and present viable options.
Most people are not aware of this crisis that is long term health care until it happens to them or to someone close. Educate yourself, take action, see an attorney, and plan for the future. Right now!