Archive for the ‘Retirement’ Category

Long-Term Care Costs Outpace Medical Inflation Rate

Posted on October 26th, 2011 by Em-Power Services

Bloomberg Businessweek is reporting that the average cost for assisted living rose 5.6 percent to $41,724 this year, compared with a 5.2 percent increase last year.

The report comes from data contained in a report by MetLife’s Mature Market Institute released this week.  That report found the cost for a private nursing-home room increased 4.4 percent to $87,235 a year and adult day services climbed 4.5 percent to $70 a day. Home health-aide service was unchanged at about $21 per day.

Of particular concern is that the report finds that this year’s increases are greater than previous years. A MetLife representative noted that, “the state of the economy, combined with rising health-care and energy costs, are having a significant impact on long-term care rates… Long-term care rates continue to outpace the medical inflation rate.”

Federal Government options for supporting the costs associated with long-term are limited. The Obama Administration recently decided not to move forward with a public long-term care financing option called the Class Act. Medicare covers only short-term nursing and home health services.

“This is why the employer is central in the long-term care equation,” noted Em-Power Services President Doug Ross. “Without long-term care insurance, future retirees are going to face a financial crisis where they spend all of their savings and retirement to pay for long-term care.”

An employer that offers group long-term care insurance as a benefit can help employees protect their savings and retirement. It’s estimated that one of two people age 65 and older will require some form of long-term care. The average length is three years, and costs can exceed $250,000.

Many states offer additional tax deductions for employers who offer long-term care insurance as a benefit.

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Planning for the “New” Retirement

Posted on July 19th, 2011 by Em-Power Services

An article published Associated Press writer David Carpenter takes an excellent look at how financial requirements.

Carpenter notes that big changes are coming to Medicare coverage by 2014, and that it’s now essential to include prospective health care costs in retirement planning. He recommends that retirees consider buying “Medigap” insurance and that “pre-retirees should consider buying long-term care insurance”. The reason is that a three year stay in a nursing home facility currently runs about $250,000 and will only increase.

Planning for heath care costs becomes even more important when you factor in some other issues about the “new” retirement.

First, notes Carpenter, is that retirees don’t spend less like they used to. With more active retirements now the norm, spending on travel, hobbies, and leisure activities has increased dramatically. He also notes that retirees won’t automatically be in a lower tax bracket.

Carpenter believes tax rates are likely to increase both at the Federal and state levels. He also makes the point that many retirees have paid off their mortgage, which removes those tax deductions. Some long-term care insurance policies offer tax deductions at the Federal and state levels, depending on where you live.

The point Carpenter drives home is that retirement isn’t what it used to be. Not only are we living longer more active, longer retirements, but we’re increasingly likely to need health at various points during this time in our lives, including potentially long-term care. Those who are planning for retirement need to think about how those health care needs will be managed without depleting savings.

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