Are you the meat in the sandwich generation?

Here’s a dilemma. You’re both working, raising kids and saving or paying for college. Saving for retirement. You’re active in your community. Dad died and mom needs help getting around, being fed, getting dressed and bathing. You’re the adults on-deck. Welcome to the sandwich generation. How will her care be paid for?

For that matter, how will you pay for your own long term care when the time comes?

This is National Long Term Care Awareness Month – a time to help bring home the reality that

• Medicare pays only for skilled nursing, NOT FOR AID WITH THE TASKS OF DAILY LIVING.
• Medicaid pays only for the very poor but often won’t pay for care in your own home.

Therefore, the responsibility for assisting people with the basic tasks of living falls squarely on individuals and their families. The cost of getting that help typically ranges from $3,300 to more than $11,000 per month.

So let’s do the math, conservatively, for a typical retiree who has a monthly fixed income of $4,500 from all sources:

$ 600 Food expense
$ 165 Medicare supplemental insurance premium
$ 100 Out-of-pocket medical expenses
$ 500 Mortgage or rent payment
$ 100 Home maintenance
$ 390 Average home energy cost
$ 135 Average utilities
$ 200 Average car payment
$ 150 Average car operating cost
$ 400 Dining, entertainment, travel

$2,740 Total essential monthly living expenses (single)
$3,070 Total essential monthly living expenses (couple)

If the pot of money saved for retirement income is $457,000 and long term care is needed in addition to monthly living expenses, the draw-down on the nest egg looks like this:

• Average Home health Aid ($5,245/month) – You run out of money in six years.
• Average Assisted Living Facility ($5,814/month) – You run out of money in five years.
• Average private nursing home room ($11,410 / month) – You run out of money in three years.

The alternative is having a family member reduce their work hours or quit their job or, pay someone to do it for them.

This is where Long Term Care Insurance comes into play. As with any insurance that anticipates paying benefits at some point, the monthly premium is lower the younger you are. It also depends on your health at the time you buy insurance coverage.

Let’s look at the health status question. If you have a change in health that makes you more likely to need long term care in the future, you may not be able to find LTC insurance at any cost. Just as an insurance company won’t sell insurance for a house on fire, they are not going to sell insurance to someone who is very likely to need care shortly after the policy is sold.

On the other hand, someone who buys LTC insurance at a younger age while they are in good health makes economic sense. For the consumer, it is making what amounts to installment payments for the time they may need to file a claim for LTC benefits.

If your mom or dad are healthy today but do not have LTC insurance, it makes sense to find out how much they can budget. The policy benefit they can afford may not cover all the costs but it can take the edge off the sticker shock of paying for outside help.

For you and/or your spouse, making the investment today can pay off in lower monthly premiums and offer peace of mind for you to avoid being a financial burden to your children.

Here are statistics and requirements about LTC benefits.

• Approximately 70% of all individuals will need LTC assistance before they die
• The average time benefits are required is about 3 years ($143,000 ~ $345,000)
• Also, a large percentage of claims for LTC benefits come from people younger than 60 years of age
• The average duration of Alzheimer’s is ten years with facility costs ranging from $10,000 to $12,000 per month

“I have been guiding people through this discussion for years and I continue to be both surprised and concerned that there is little understanding or attention given to the near-certain costs for assisted living,” says Kerry Peabody of Clark insurance.

If you’re the meat in the sandwich generation, it may be past time to get long term care insurance for you, your spouse and your parents.