When people ask me “Why do you ride when it’s so dangerous and expensive?” (which, unfortunately, is true) I explain that my love of horses and a passion for riding make it something I’m driven to do. I’ve been riding horses since the age of 5. A broken arm at the age of 12 while riding a school horse was the catalyst for getting my first horse for my 13th birthday. Though the naysayers don’t know what a joy riding is, they are right about the expense and danger of the sport. If something were to happen and you required physical assistance and were unable to work, would you still be able to meet all of your financial obligations? That’s why it is imperative to have a long term care plan in place.
I have been a long-term care specialist for the past 6 years. My job is to help educate my clients about the options available for long-term care and to help them devise their plan.
What is long-term care?
Long-term care is defined as the help that someone needs, for a prolonged period of time, with the major daily tasks of life that we often take for granted; it’s basically when you stop working from the neck up or from the neck down. Activities such as being able to feed yourself, get dressed, get into and out of bed, bathe, use the bathroom, or cognitive function are all activities that we do daily without much thought.
But what would you do if something happened where you could no longer do those things? Have you ever thought about it? What would happen if you were unable to train your students, school clients’ horses, manage your barn, care for your own horses, or attend a horse show? Do you have enough savings to pay all of your monthly bills while you recover? Do you have a spouse or partner that could (or would) provide daily care? Or, if you’re single like me, could you afford to pay someone to care for you on top of all your financial obligations?
When people hear long-term care, they typically think of someone elderly living in a nursing home. While a nursing home is one of the places that people receive care, a majority of care is received at home or in an assisted living facility. Thirty-seven percent of the people receiving LTC are under the age of 65, and seventy percent of people age 65 can expect to use some form of long term care during their lives (LongTermCare.gov/The Basics). I doubt that interaction with horses lowers that statistic. The majority of the people who will receive the care are women. (AALTCI 2012-2013 Source Book, Reasons to Plan: Women Need More Long Term Care Than Men).
The cost of LTC isn’t cheap either. The national average for home care is $21/hour ($5040/month for 8 hrs/day, 7 days/week). For assisted living facility care the average is $3350/month and for nursing home care the average is $6250/month. The cost of care is significantly higher in many metropolitan areas (Source: AALTCI 2012-2013 Source Book).
Planning for the Unexpected
Here are some different ways that people plan for LTC:
- Self-insure – Now unless you currently have an LTC policy, this is your plan. It means that you have no insurance and will have to pay all for all of your expenses out of pocket at the rates that I previously mentioned.
- Health Insurance or Medicare – Depending on your age, you would be covered by one or the other. These are meant to pay for acute short term care costs: surgery, prescriptions, hospital stays, doctor visits, etc , not LTC.
- Medicaid – For some people this is an option, but the deductible is high and it primarily pays for institutional care (assisted living and nursing home care). States are required to try and recover their costs from your estate. Estate Recovery: State Medicaid programs must recover from a Medicaid enrollee’s estate the cost of certain benefits paid on behalf of the enrollee, including nursing facility services, home and community-based services, and related hospital and prescription drug services. State Medicaid programs may recover for other Medicaid benefits, except for Medicare cost-sharing benefits paid on behalf of Medicare Savings Program beneficiaries (Medicaid.gov/estaterecovery)
- Care from a family member – This may be an option for some people. But make sure to look at this option in a realistic manner and take these things into consideration: Is your significant other able to provide that care? If they’re working, what would happen with the loss of their income? If your children are going to provide the care, who’s moving in with whom and how would that impact their lives? Every family situation is different.
- Long-Term Care Insurance – This is an insurance policy that pays for long-term care services. Policies vary in terms of what they will cover, and insurance companies do require that applicants qualify for the coverage through an underwriting process.
A good long-term care insurance policy delivers broad and flexible benefits to help provide and pay for the long-term care services you need. It provides a pool of money for whenever and wherever you need care. It has four main components:
- How much money do you want to receive each month if something happened to you?
- How many years do you want to receive that money for?
- How many days are you willing to wait before receiving your benefits? (This is also known as the deductible, usually anywhere from 0-90 days.)
- Do you want your benefits to grow in value each year?
If you take into account these four components and factor in your current age and health, that’s how the premiums are determined. There’s no set age for purchasing the insurance. The best time is when your health and finances allow.
We have car insurance, health insurance, homeowner’s insurance, horse, and farm insurance. We’re so busy making sure that everyone and everything else is taken care of that we forget to take care of ourselves. While LTC insurance may not be the right option for everyone, having some sort of plan in place is a must. Peace of mind is what we all strive for!