A woman's guide to health care in retirement – Part 2

Buying long-term care (LTC) insurance is an option. While premiums may be costly, having LTC insurance may allow you to elect where you receive your care, the type of care you receive, and who provides care to you. Many LTC insurance policies pay for the cost of care provided in a nursing home, assisted-living facility, or at home, but the cost of coverage generally depends on your age and the policy benefits and options you purchase. And premiums can increase if the insurer raises its overall rates. Even with LTC insurance, you still may have some expenses not covered by LTC insurance. For example:

• Not all policies provide coverage for care in your home. While the cost of in-home care may be less than the cost of care provided in a nursing home, it can still be quite expensive.

• Most policies allow for the selection of an elimination period of between 10 days and 1 year, during which time you are responsible for payment of care.

• The LTC insurance benefit is often paid based on a daily or monthly maximum amount, which may not be enough to cover all of the costs of care.

• While lifetime coverage may be selected, it can increase the premium cost significantly, and some policies may not offer that option. Another option that can be valuable, but also increase the premium expense considerably, is cost-of-living or inflation protection, which annually increases the daily insurance benefit based on a certain percentage.

• Most common LTC insurance benefit periods last from 1 year to 5 years, after which time the insurance coverage generally ends regardless of whether care is still being provided.

To encourage more individuals to buy long-term care insurance, many states have enacted Partnership programs that authorize private insurers to sell state-approved long-term care Partnership policies. Partnership policy owners, who expend policy benefits on long-term care services, will qualify for Medicaid without having to first spend all or most of their remaining assets (assuming they meet income and other eligibility requirements).

Medicaid and government benefits

Government benefits provided primarily through a state's Medicaid program may be used to pay for long-term care. To qualify for Medicaid, however, assets and income must fall below certain limits, which vary from state to state. Often, this requires spending down assets, which may mean using savings to pay for care before qualifying for Medicaid.

If you are a veteran, you may be eligible for long-term care services for service-related disabilities and for other health programs such as nursing home care and at-home care through the Department of veterans Affairs (VA). If you don't have service-related disabilities, you may also be eligible for VA benefits if you are unable to pay for the cost of necessary care. Visit the Department of veterans Affairs website (www.va.gov) for more information.

Other health-care factors to consider

It's clear that health care is an important factor in retirement planning. Here are some tips to consider:

• Evaluate your present health and project your future medical needs. Considering your family's health history may help you determine the type of care you might need in later years.

• Don't presume Medicare and Medigap insurance will cover all your expenses. For example, Medicare (Parts A and B) does not cover the cost of routine eye exams, most eyeglasses or contact lenses, or routine hearing exams or hearing aids. Include potential out-of-pocket costs in your plan.

• Even if you have Medicare and Medigap insurance, there are premiums, deductibles, and co-payments to consider.

You may have already begun saving for your retirement, or you could be retired already, but if you fail to include the cost of health care as a retirement expense, you're likely to find that health-care costs can sap retirement income in a hurry, potentially leaving you financially strapped.

Health care in retirement can be an expensive proposition. How much you'll spend on health care during your retirement generally depends on a number of factors, including when you retire, how long you live, your relative health, and the cost of medical care in your area.

Article courtesy of Forefield. Securities offered through NPB Financial Group, LLC. A Registered Investment Advisor/Broker-Dealer Member FINRA, MSRB, and SIPC.