How to avoid nursing home costs: CCRCs may provide the progressive care needed.

 A continuing care retirement community is able to offer progressive levels of care as they become necessary.

In today’s uncertain economic times marked by roller-coaster markets and flat-line wages, leave it to a certain segment of Michigan seniors and retirees who are choosing to live in bigger homes instead of taking a more common route of downsizing during their retirement years.

In fact, according to a recent report by Merrill Lynch and Age Wave, 49% of retirees in their survey chose not to downsize in “their last move.” Moreover, 30% were electing to move into a much larger home. Such choices obviously belong to a retirement sector quite “confident with their investments.”

More importantly, the survey revealed that about 20% selected a larger home not only to accommodate family visits, but also to provide the space for families to live with them in the future—the survey indicates that 16% of the retirees responding actually had a boomerang child living with them.

Accompanying this ongoing trend is the notion that a larger home may actually provide better in-home care options; this, even though larger homes bring higher taxes, maintenance and even association fees.

Still, and while larger homes can make in-home care a more viable option, the increase interest in other choices, such as assisted living and even nursing home options continues unabated.

Staying in the home.

It may not be surprising that around 90% of seniors polled by AARP showed a preference for ‘aging in place, or staying in their home after the age of 65. Often, that might mean customizing rooms by adding ramps, or installing stairlifts, or even moving an upper bedroom to the first floor.

But when health conditions deteriorate for those ‘aging in place,’ seniors can still receive hospice care in their homes during those end-of-life stages—funded by Medicare and Medicaid services.

Is ‘assisted living’ covered by Medicare/Medicaid?

Of course, the home may not be a viable option, because of expense and minor health issues. As such seniors may favor an assisted living facility. Unfortunately, neither Medicare and Medicaid will pick up room-or-board costs.

However, these facilities accept seniors who may be at different ‘tiers’ of medical need, thereby affecting the resident’s monthly charges. Generally, the more ambulatory you are, the cheaper the overall costs.

By law, these facilities can only offer extra care up to a certain level; then, other options may have to be considered. But if you are fortunate to have long-term care insurance, the policy may provide some “in-home” help while you are in an assisted-living setting.

Continuing Care Retirement Facilities (CCRCs)

Generally, these facilities require a one-time ‘entry fee’, and then monthly payments that reflect the range of services and amenities offered. Ideally, as their ability to live independently decreases, seniors are able to receive progressive care at the CCRC—a viable solution to the universal question of how to avoid nursing home costs.

CCRCs are normally set up to  provide  around-the-clock care when needed. Of course, with this level of assistance comes higher monthly costs.

‘Assistance’ from your 401(k).

Congress tried to include long-term care (LTC) for all U.S. citizens in the Affordable Care Act (ACA), but it was axed. Instead, the hope is that the IRS will eventually allow us to use our 401(k) to at least pay for LTC premiums, thereby lessening the agency’s current definition of “hardship” cases.

IRS’s existing hardship withdrawal rules do provide for tax-free withdrawals to cover what is considered to be “significant medical expenses.” But it remains questionable that the hardship rules will change; this, owing to the potential decrease in tax revenues that could result.

To start the conversation about the importance of an overall estate plan, including the need for long-term health coverage, contact us today.

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