Think about how you’ll pay for long-term care
Life expectancy continues to increase. The big question is: how many years can a person be expected to live in good health? Statistics Canada’s estimate of health-adjusted life expectancy at birth is 69 years for men and 71 for women.
That means the average Canadian can expect to live roughly 10.5 years with some chronic condition or disability for which he or she may need assistance.
How would you pay for longterm care?
BUY INSURANCE
One option is to buy long-term care insurance. About one per cent of Canadians own long-term care insurance.
Buy coverage when you are young. As you get older, the cost of long-term care insurance becomes very expensive. You could become uninsurable.
USE YOUR SAVINGS
In the Canada Health Act, home care and nursing home care are placed in a category called “extended services,” which are not insured services. Availability and access to long-term care services varies widely from province to province.
Provincial governments cover the costs of many services for low-income seniors. However, if you have enough resources of your own, you can pay for the type of long-term care you want.
If you need intermediate-level assistance, you could move into a retirement residence that is privately operated for profit. The retirement residence could look after your meals, laundry, housekeeping and transportation to medical appointments, for
example. Rent typically ranges from $3,000 to $5,000 per month.
Alternatively, you could stay in your own home and hire a private caregiver and house cleaner, with regular visits by a nurse and occupational therapist. The total cost could exceed $7,000 per month.
IF YOU HAVE NO MONEY
What if you have minimal savings and don’t own real estate? Low-income seniors can live in government-subsidized apartment units, paying rent equal to a percentage of their incomes.
If you need further assistance — with housekeeping and meals, for example — but you cannot afford to move into a privately run retirement residence, you could obtain homecare support from the government. Depending on how many hours of care you require, the home care service charges are based on a sliding scale according to your income level.
NURSING HOMES
The provinces subsidize nursing homes. All people who qualify, based on need, are eligible
for nursing home care. Each province has a single entry access system through which your physical need is assessed, you are assigned to a facility and waiting lists are managed.
The rent you’d pay for such high-level care, with 24-hour nursing supervision, is determined by your income shown on your tax return. Most provinces will not look at any assets you own, nor will you be expected to sell your home to pay for nursing home rent.
GIVING AWAY PROPERTY
Don’t give away assets to your children with the hope that your children will cover the cost of your care.
Maybe you or your children are confused from watching American TV shows that discuss U.S. Medicaid’s look-back rules. The Canadian system is quite different.
Once you have given away assets to your children, they are hardly ever retrievable. What if your child goes bankrupt, has tax problems, divorces or has a disagreement with you?
The big challenge is how much retirement savings you should be holding back to pay for intermediate-level care in a privately-run retirement residence for many years — before you would qualify for government subsidized nursing home care.
Whether you’re approaching retirement or already retired, rich or poor, healthy or ailing, think about what happens when you need long-term care.
Talk to your financial adviser. Talk to your family.