How to protect your finances from excessive long-term care costs

Dear Toni: I am retiring in June when I turn 70 and my wife, Bonnie, will be 68. Recently, we applied for a long-term care plan and were denied due to simple health issues.

I had my prostate removed due to cancer about five years ago with no current issues, and Bonnie has A-fib, which is under control. The insurance agent said that people over 60 find it difficult to be accepted by a long-term care plan.

Can you please explain other long-term care options that Bonnie and I can explore? We do not have a plan in place should we need extra financial help since we were not approved for a long-term care policy. — Peter, Tulsa, Okla.

Dear Peter: There’s good news. In the past few years, new plans with extended health care benefits have been developed, assisting baby boomers with unexpected health or accident issues.

The Medicare &You handbook, under “Paying for long-term care,” discusses how important it is to plan now to maintain your independence and receive the proper care in the setting you desire.

Medicare pays only for medically necessary skilled nursing facility care or for home health care if you meet certain conditions. Skilled nursing has 100 days of benefit with days 1 to 20 having a $0 copay per day and days 21 to 100 with a specified copay per day. If you cannot qualify or do not meet Medicare’s qualification for skilled nursing, you will pay 100 percent of the cost out of your pocket.

Medicare doesn’t cover nonmedical long-term care. This is why purchasing a policy to help with a long-term need becomes essential.

Let’s discuss options to protect your finances from excessive long-term care costs, especially if you have health issues:

■ Short-term care insurance plans: These policies have a simple health questionnaire with yes-or-no questions, making it easy to qualify. They will help pay for a nursing home, assisted living and a personal care home, which qualify as “facility care,” with additional benefits for care in your home. Providing various options ranging from $50 to $400 per day with benefit periods from one to two years, depending on the plan, they prevent people from draining their savings or 401(k) while recovering from an illness.

■ Life and annuity policies: Many life and annuity insurance policies have a provision for long-term care. The policyholder can receive a certain amount of long-term care, but health questions may keep you from qualifying.

■ Aid and Attendance benefits: The VA can help veterans with long-term care issues. More than $20 billion is available for long-term care from pension money, just waiting for veterans to apply for their Aid and Attendance benefits. You must have a long-term care issue to qualify.

■ Traditional long-term care: If you are under age 60 and in good health when you purchase a long-term care policy, it may be easier to qualify with lower premiums.

Many Americans worry that a chronic illness not covered by Medicare could be their biggest retirement expense. Proper planning is crucial.

Toni King is an author and columnist on Medicare and health insurance issues. If you have a Medicare question, email info@tonisays.com or call 832-519-8664.