4 factors to consider when looking at retirement community and long-term care costs

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There are many options and factors to consider when researching retirement communities, especially when it comes to costs. This article should take confusion out of the equation by providing you with some of the frequently heard questions and answers for evaluating your options. Whether you have questions about insurance, about money or about which options you need or want, these are normal questions to ask. Here are the top four questions you should ask yourself as you research and make a decision about your future plans.

1. What type of lifestyle do I want?

 

Assessing what type of lifestyle you want is an important factor to consider when looking at what type of retirement community you want to live at. Different communities may have a range of different services and amenities – some of which may be included in your monthly service fee or they may be added on as an additional fee. For example, some independent living communities may have very limited offerings, and are rather just age-qualified apartments.

On the other hand, if you’re wanting a community rich with services and amenities, a Life Plan Community might be the right option for you. Life Plan Communities, previously known as Continuing Care Retirement Communities, are a retirement living option that encourages an active independent living lifestyle, providing accommodations and health care if your needs ever change. Many of these communities include a range of amenities, including fitness classes, onsite personal trainers, social activities and more, all designed to keep you active and healthy into your retirement years.

 

2.  What type of care will I need in the future?

Another question to ask yourself when looking at retirement communities is what type of care you may need in the future. You may be healthy now and may feel that you are not ready to move to a retirement community. However, having a realistic expectation of future health care needs may save you a lot of money down the road. Care costs can quickly rise depending on the needs you may have in the future. For example, memory care, which includes 24/7 nursing services, enhanced security measures and brain enrichment activities, has different associated costs than other health services. Because it’s impossible to know exactly which type of care you will need in the future, it may make more sense to consider a Life Plan Community – which typically allows you to live independently for as long as possible while also providing you with guaranteed access to a range of health services, should the need ever arise. Some of the other care options that don’t follow the Life Plan Community model may offer pay-as-you-go plans, which typically end up costing more than just paying one large lump sum at the beginning, but can be useful for those who have a fixed monthly income or who may not anticipate receiving care for very long.

 

3. How will you pay for care when you need it?

Many people plan throughout their entire lives for their retirement. If you are someone similar, and have a nest egg set aside for the future, in most cases you can use that and any other assets to pay for your care. However, there are some points to be made about whether you can rely on certain insurance programs to pay for your care, whether it’s in addition to that nest egg or instead of it.

There are four major insurance types you may have in your retirement years: Medicare, Medicaid, employer-based retiree coverage and Medigap. You may also have a combination of these insurance plans. Each plan or combination of plans varies in its retirement community coverage, so understanding which one(s) you have, and the extent of its coverage, is an important step to take when looking at costs. It is important to note that virtually none of these plans will pay for independent living or Life Plan Communities but do pay a portion of skilled nursing care, rehabilitation costs and other health services.

 

Medicare

Medicare is the major insurance plan provided by the government for all people over the age of 65. Medicare covers 100 percent of skilled nursing care for 20 days, then they pay about 80 percent of the cost for an additional 80 days after that. Medicare can also pay for things like medication and hospital stays.

 

Medicaid

Medicaid is a type of state-provided health insurance that can be offered to low-income seniors or those with disabilities. Since Medicaid is managed on a state-by-state basis, coverage for skilled nursing and assisted living varies, but it generally covers these types of health care.

 

Employer-based retiree coverage

Sometimes when you retire from your career, your employer can choose to continue providing a group health insurance plan for you and any dependents you may have. Often, employer-based retiree coverage is combined with Medicare coverage, which you receive after the age of 65. Once you’re 65, these plans typically will require you to enroll in Medicare, and then will cover a certain amount of anything Medicare doesn’t cover, including care like skilled nursing. These rules also apply to people who continue to work past the age of 65. It is important to note that if your former employer goes bankrupt or out of business, you may be protected by COBRA insurance plans if you lose your insurance coverage, or you may enroll in a Medigap policy instead.

 

Medigap

A Medicare Supplement Insurance policy, or Medigap, is sold by a private company and helps pay some of the costs that Original Medicare does not cover, including things like copayments, coinsurance and deductibles. Just like with employer-based retiree coverage, your larger Medicare plan is responsible for paying the larger, initial share for covered health care costs and then the Medigap covers its portion of the remaining amount, and can function as a long-term care insurance. While Medigap plans can supplement temporary and some long-term skilled nursing care, even the most comprehensive plans do not 100 percent cover long-term care needs. However, some Medigap plans can cover the remaining 20 percent costs associated with skilled nursing care that Medicare won’t cover once your care defaults past the first 20 days of 100 percent Medicare coverage. That coverage typically only extends to the amount of time Medicare will cover.

Regardless of which insurance you have, if you choose a Life Plan Community, you will be choosing the ability to age in the community you love with award-winning health care benefits and all of the comforts of home. You can receive peace of mind that future health care needs will be taken care of in the event you outlive your assets or reach maximums with your insurance plans.

 

4. What are the cost differences for different retirement options?

Being upfront with yourself in terms of your retirement budget is an important step when assessing your options and considering costs. Once you’ve considered which insurance plan you have or want to purchase, being realistic about how much money you can spend on either a retirement community or long-term care will be an important factor in making a decision about your future. There are a range of options associated with retirement community costs. Type A, or Life Care, requires a high entry fee and a relatively steady monthly fee, and typically covers all amenities and services on-site. Type B, or Modified Fee-for-Service, is similar to the Type A option, but may require an additional cost if additional health care services are needed, such as skilled nursing care. Type C, or Fee-for-Service, has a lower entry fee, typically covers most on-site amenities, but if assisted living or skilled nursing care is needed, your monthly fee will increase to cover the full market rate amount for services. Lastly, rental contracts do not typically require an up-front fee, and the level of on-site amenities and services you receive will depend on your monthly service rate.

 

More questions? Contact the experts at Sun Health.

If you have more questions or would like to talk about your retirement in a Life Plan Community, call the experts at Sun Health Communities, owner and operator of three Life Plan Communities: Grandview Terrace, La Loma Village and The Colonnade. Contact us today!

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