Saving in the Wake of High Healthcare Costs

While the saying rings true, that “Two things in life are certain—death and taxes,” life can also bring about unforeseen occurrences resulting from serious illness.  How we hedge our wealth against these events that have the ability to weaken the financial foundation of a retiree is an important area of estate planning. 

Learning how to preserve wealth against the overwhelming costs in a skilled nursing facility (SNF) can be beneficial in the long run.  The national average for a one-year stay in a semi-private room in an SNF is $77,380 and the average stay in an SNF ranges between 1 and 3 years depending on your gender and demographic.  One technique used to offset these expenses is an insurance contract.  Something known as an Accelerated Death Benefit can be used against the face value of a long term care policy for more immediate needs like an advance on the policy due to a terminal illness diagnosis or costs associated with long-term care.  You can also create an Irrevocable Life Insurance Trust, which is a helpful tool aiding the grantor in protecting an estate from estate taxes or those potentially damaging costs of long-term care. 

See Matthew Jarrell, Preserving Wealth Despite High Healthcare Costs, Investopedia, 2015.