Could Your Future Care Costs Drain Your Savings? Here’s How to Protect It.

When You Get Older, What Happens If You Need Help?

Imagine you’re playing a video game, and you’ve spent a lot of time building up your character’s “health points” and “resources” for the endgame. Now, imagine you reach a part of the game where your character suddenly needs a lot of “healing potions” and “support items” to keep going. If you haven’t saved up enough of these items, or if the game’s rules change and suddenly these items are super expensive or not covered by your in-game insurance, you could be in trouble.

That’s a bit like what can happen when people get older and need what’s called “long-term care.” This isn’t just a quick visit to the doctor; it’s ongoing help with daily tasks, maybe in a nursing home or with someone helping at home. The numbers show that a lot of us will need this kind of care – about 70% of people will need some help after they turn 65. And here’s the kicker: it’s not cheap. We’re talking about costs that can be over $100,000 each year for a nursing home.

Let’s think about your mom, who is 80. She had to spend some time in the hospital and now needs to go to a place where she can get special nursing care because she can’t manage on her own right now. The problem is, her insurance (which is often something called Medicare for people over 65) says she doesn’t really need that kind of care, but the nursing home still wants to be paid. They’re saying they want to take all her Social Security and pension money to cover the bills. This brings up a big question: Can the nursing home just take all her money, even if she has other bills to pay, debts she had before she got sick, and a home she wants to keep for when she gets better?

Breaking Down the ‘Insurance Game’

For most people over 65 in the United States, Medicare is their main “insurance card.” Think of Medicare as the game’s basic rulebook for healthcare. If your mom has a Medicare Advantage Plan, it’s like a special edition of the game run by a private company, but it still has to follow all the main Medicare rules.

Now, here’s a crucial part of the Medicare rulebook: Medicare generally doesn’t pay for what’s called “custodial care.” This is the kind of help for daily tasks like bathing, dressing, or eating, if you can’t do them yourself. Medicare does cover “skilled nursing care” for a limited time (up to 100 days), but only in very specific situations, like right after you’ve been in the hospital.

So, in your mom’s case, since she just left the hospital, there’s a chance the denial of her skilled nursing care isn’t the final word. This is where you can play a role. If her doctor or the care providers at the nursing home believe she truly needs this professional care, you can ask them to help you appeal the decision with Medicare. Medicare has a process for this, and having medical professionals on your side can make a big difference.

What Happens If the Appeal Doesn’t Work?

If the appeal isn’t successful, your mom will then be considered a “private pay” patient. This means she’ll be directly responsible for paying all the costs. The nursing home can’t just seize her money without warning, but they will send her bills, and she’ll be expected to pay them to keep her spot. Nursing homes often require payments in advance, so she’ll need to have the funds ready.

If your mom can’t afford to pay these bills, the nursing home has rules about what they can do. They can ask her to leave, but they have to give her “reasonable and appropriate notice.” This is especially true if she’s not in the middle of applying for another type of government assistance called Medicaid.

Medicaid is another program that does pay for nursing home care, but it has very strict rules. To qualify for Medicaid, a person can’t have much in the way of savings or valuable possessions – usually, it’s limited to about $2,000 in what they call “countable property or resources.”

If your mom does qualify for Medicaid, then the system changes. She would be required to send her Social Security checks to the nursing home. However, she would get to keep a small amount for personal needs, and she could also pay for other insurance premiums she might have.

So, to answer the question directly: If your mom isn’t successful in getting Medicare to cover her skilled care, and she doesn’t qualify for Medicaid, the nursing home can essentially take almost all of her income and savings to pay for her care if she needs to stay there. It’s a tough situation, and it highlights why planning is so important.

The ‘So What?’ – How This Affects YOU

This might seem like a story about your mom, but it’s a valuable lesson for you too, even though you’re young and might not have much money right now. Thinking about this situation helps you understand a few key things about your own future and the future of your family:

• The Cost of Care is Real: As you can see, needing help later in life can be incredibly expensive. This isn’t just about having enough money for rent or food; it’s about covering significant, ongoing medical and living expenses.
• Insurance Isn’t Always a Guarantee: Even with programs like Medicare, there are limits to what they cover. You can’t always assume that insurance will pay for everything you might need.
• Savings and Income Are Crucial: The money you have – whether it’s from Social Security, pensions, or personal savings – can be used to cover these costs. If you don’t have enough, it can create a huge burden.
• Planning Prevents Panic: The best way to avoid a situation like your mom’s is to prepare before you need the care. This means thinking about how you’ll fund it and what kind of support you might need.
• It Affects Your Family: If your parents or grandparents need long-term care and don’t have a plan, it can put a significant financial strain on them and potentially on you as well if you end up helping to cover costs.

Your Actionable Step: Start Thinking About Your Future Nest Egg

The article mentions that the best way to avoid these financial burdens is to be prepared. For older adults, this often means looking into long-term care insurance. This type of insurance is designed to help cover the costs of in-home assistance, nursing homes, or assisted living facilities. Without this kind of planning, paying for long-term care can quickly deplete retirement savings, and the burden can fall heavily on family members.

While buying long-term care insurance might seem far off for you, the underlying principle is about building a strong financial foundation for your future. Here’s a simple step you can take right now to start thinking about that:

Research “high-yield savings accounts” and “automatic investing apps.”

Think of a high-yield savings account as a special piggy bank that earns a little extra money just for keeping your savings there. Automatic investing apps, like Acorns, are designed to make saving and investing super easy. They can take the spare change from your everyday purchases and put it into investments for you. Even small amounts saved consistently over time can grow into a significant amount by the time you’re older. Understanding how these tools work is your first step in making sure you have the financial cushion you’ll need for whatever the future holds.

Disclaimer: This is for educational purposes only and not financial advice.