Home Care or Home Health Care?
One of my clients works in home health and she wanted me to share my opinion on saving for the future costs of home care and home health care. Before we get into the numbers did you know there is a difference between home care and home health care? Here is an interesting article on the subject, but I like to think of it like this:
Home care involves your daily living activities, such as preparing a meal and using the bathroom. Basically, you’ll need these services forever. Home health care is normally medical services that you may need temporarily, such as during a rehabilitation period after a hospital stay.
One of those is paid for by health insurance, but the other is not. Which one you ask? Probably the one that’s temporary, right? Insurance looks at you like an investment. They hope you’ll pay in with premiums and they’ll never have to pay out. If insurance knew they had to pay for guaranteed, constant services for the rest of your life, then they probably wouldn’t insure you or the premium would be unaffordable. By their standards, you would be a bad investment. Then who would pay the bill?
Let’s use a hypothetical example to get us thinking about home care and home health care in our own lives.
Let’s say you break your leg at work and it requires surgery. While at home recovering, a physical therapist comes in twice a week to help you regain the strength in your leg. Your health insurance or workman’s compensation will probably pay all of the costs of this service because it is temporary. This would be considered home health care.
Now let’s jump ahead ten years. Your leg becomes arthritic and it’s extremely difficult to get around. Sure, you can still get dressed and go to work, but it takes so much more effort and you’re exhausted. You start to realize you need help as your health declines. Your exhaustion prevents you from preparing healthy meals and you’re skipping some of your hygiene needs in order to save time. Things that we do daily without thinking suddenly become a burden. This would be considered home care services. Unfortunately, you’ll probably need these services for the rest of your life. Health insurance doesn’t usually like to pay for services that last forever. Trust me, I know they can be a jerk sometimes.
Will you ever need home care or home health care?
When you’re 25-35 years old it’s easy to feel invincible. Look at how many still don’t have health insurance. Sure, for many it is unaffordable and we all know healthcare costs is a major issue in our country. However, there is still a large group of people who just don’t want health insurance because they are “young and healthy” and they “can worry about that later.” (Yes, if you come to this financial planner with that argument be prepared to hear a lecture. One trip to the hospital could ruin your entire plan!)
My other favorite is “Oh my family and friends will help me until I get back to normal.” Sure, it would be nice if you’re that fortunate, but how often is that the reality? If we can’t rely on these people to text us back do we really expect them to stop their lives, come to our home, and help us use the bathroom? Please understand I’m not saying your friends and family are unreliable or selfish, but we have to be realistic. We can’t fault them for having their own lives and pursuing their dreams. Would we like it if they kept us from doing the same?
We have to plan for the time in our life when we need home care.
My personal goal is to have enough money where I can hire my own assistants in order to have 24-hour a day care. Without it, I have to rely on family. Yes, I receive some help through Medicaid where a person helps with my daily living needs for about four hours a day, five days a week. The max I can receive with this service is 80 hours a month, so the remaining approximately 640 hours in a month must be covered by my loved ones.
Let’s not forget that the person who gets to come into my home is randomly hired and chosen for my needs by a manager who just knows me as a piece of paper. Sometimes we get lucky and meet wonderful people that really help my life, but others come with more limitations than I have (most of which are rules created by the managers and politicians who just don’t want to be sued).
To top it all off, these benefits are holding me and other people with disabilities back because we can be punished (sorry there is no better word here) for trying to succeed. I’ll lose those 80 hours if I make too much money, which is an amount that isn’t even close to the amount needed to pay for my own care…oh yes, I did the math. I’ll need a minimum of $1.3 million to cover just having someone available 24 hours a day for a period of time let’s say 20 years. I would like a roof over my head and some food to eat as well, so I better get started, right?
Of course, if I don’t reach my goals, then I can move into a facility. That day may come, but if I can do anything to prevent it then that’s what I’m going to pursue. It’s okay to fail to reach a goal, but it’s unacceptable to not try!
Now, I know you’re thinking, “But Jonathan I don’t have a disability, how does home care stuff relate to me?”
Turn the lights on and sit down because this is going to get scary. Currently, when you turn 65, you’ll be forced to go on Medicare instead of your employer’s insurance or whatever you have. That’s no big deal, but if you need home care Medicare won’t be much help. If you don’t have enough to cover that then you’ll be on the road to a facility. Remember, they aren’t just for people with disabilities, they’re also for the elderly who can no longer care for themselves.
With all of the medical advances of today, the odds are pretty good that you’ll live a long life. This is great news! However, if you don’t plan for this event, you can find yourself broke and forced into a Medicaid-approved facility. These facilities are much more improved than in the past, but they still may not be your top choice for your future residence. Furthermore, you’ll be forced to spend down your resources to a point before you’re eligible for Medicaid. There are ways to plan for this and make sure your family gets to keep what you spent your entire life building, but it can’t be done at the last minute.
If you go into a facility and pay for it yourself, you’ll be spending anywhere from $5,000-$8,000 per month, which can wipe out anyone’s resources fairly quickly. Long-term care insurance can help cover this bill, but my personal opinion is that these policies will either disappear in like 30 years or just be completely unaffordable. It’s a bad investment for the insurance company because the benefits are almost guaranteed to be paid out. I don’t see the insurance people liking that deal for too long.
Home care is not only about you.
Obviously, I’m very passionate on the subject of homecare because I understand what it’s like to need help. Sure, you may not be in a wheelchair, but maybe you know someone. Perhaps you have taken care of your grandparents for a weekend or you have helped your aging parents. I want you to put yourself in that person’s shoes. Then I want you to look at your children. When your children are in the middle of their lives and raising your grandchildren wouldn’t it be nice if they had peace of mind knowing you are being cared for?
This is why I believe planning for our future (also known as retirement planning) is one of the best gifts we can give our children. Yes, when you retire from your job you should have some extra free time to do what you want. However, we also have a responsibility to plan for our daily needs. With that perspective, we begin to realize that retirement planning is not about us. It’s about our children. It’s fun to joke that we have to work until we drop dead, but that won’t be the reality for most of us.
I hope that you’re healthy enough to drive yourself to work and put in a full day when you’re 85 years old. I have seen doctors and professors accomplish such a feat, but the reality for many of us will be different. We have to start planning for our future needs and we must do it now. Waiting will only increase the amount you have to put away each year to reach your goals.
Conclusion about planning for home care.
Perhaps when you started reading this you were hoping I would give you an exact number you’ll need to cover your future home care costs. Yes, we could work out an assumption, but planning for this inevitability is so much more important than just an amount of money. This future weighs on your entire family.
I think about my personal situation daily. My parents are aging and caring for me is becoming difficult. I know I’ll have to start making moves sooner than later. Again, if I don’t reach my goals, then I can go into a facility. I can also live with my sisters, so I do have options, but I’m still pursuing my independence. I do not pursue this dream because I just don’t want to live with my sisters. I do it because I love them. If I can do something to make my family’s life easier while they’re taking care of me, then I’m going to try.
I don’t share my reality for pity, but to serve as an example. We should all plan for a time when we need help. For many of us, that can be a long term event. Doesn’t it make sense to start putting something away for that time? Even if you have a 401(k) and a pension it may not be enough. Maybe contributing to a Roth IRA annually will help you help your family. Remember, your retirement is not all about you, it’s about your loved ones as well.
Email me and let’s start talking about your future!