HOW DO I PLAN FOR MY LONG-TERM CARE NEEDS?

As we grow older, chances are there will come a day when we need assistance with everyday activities. On the positive side, people are living longer. However, that actually increases the chance that we will need long-term care.  

According to a 2016 report from the U.S. Department of Health and Human Services, 52% of those turning age 65 (more than 57% of women, and nearly 47% of men) will require long term care in a nursing home during their life. And the cost for the required services may quickly deplete your assets.1 The results of the Genworth Cost of Care Survey in 2019 reported that the average cost of a one-year nursing home stay in a private room grew more than 3% annually to $102,200 from 2004 cost of $65,185.  National averages for assisted living facility costs grew 3.1% from 2014 to $90,150 average.2

Given the broad of long-term care and planning for it, this article is the first of a series I will provide on the topic.

WHAT IS LONG-TERM CARE?

Usually, when people think of long-term care, they think of nursing homes.  But long-term care means more than nursing home care. 

Long term care goes beyond medical and nursing care to include any assistance you need if you have a chronic illness or disability that leaves you unable to care for yourself for an extended period of time.  Long term care can be provided in a nursing home, assisted living facility, or in your own home. 

There is a range of services available within the community to help meet long term care needs.  These include visiting nurses, home health aides, friendly visitor programs, home-delivered meals, adult daycare centers, and respite services for caregivers who need a break from daily responsibilities. These services help supplement care given by family members.

HOW MUCH DOES LONG-TERM CARE COST?2

Depending on the level of care provided, the cost of care in a nursing home averages more than $102,200 a year, and can easily exceed $100,000 or even $150,000 depending on location and the level of care which is required.

Long term care provided at home is also costly.  Home health care provided by a licensed Home Health Aide averaged more than $4385 per month in 2019 resulting in more than $52,000 per year.  And basic homemaker assistance averaged $22.50 per hour.

WHAT ARE YOUR OPTIONS TO PAY FOR THE LONG-TERM CARE?

Many people think their private health insurance or Medicare would pay, but that’s typically not true. Health insurance really only pays for doctor and hospital bills. Medicare is not intended to cover long-term care. Medicare will cover skilled care for periods up to 100 days, but only if certain requirements are met. Unfortunately, if you need care over an extended period of time, you’d have to spend down your assets before Medicaid would be triggered, at which point, your choices of care you receive are decreased.

Others assume their loved ones will provide the care they may need. But should you actually rely on that plan? Many don’t realize how caregivers often suffer emotionally and financially as a result of their caregiving responsibilities.  

These facts explain the growing popularity of long-term care and home health care insurance policies. Using insurance means you won’t need to choose between getting the assistance you need and spending down your assets. It puts you in control.

As stated earlier this article is the first of a series I will post to discuss long-term care. The above is merely a brief overview.  In planning for potential long-term care needs, consumers must be informed about how to evaluate policies based on individual needs and preferences.

As I normally recommend, be sure to consult your financial advisor as you develop your personal long-term care plan. If you need a financial advisor or know someone who would benefit from one, please send them my contact information along with this blog.

1 Long-Term Services and Supports for Older Americans: Risks and Financing (Revised February 2016), https://aspe.hhs.gov/basic-report/long-term-services-and-supports-older-americans-risks-and-financing-research-brief

2 Genworth Cost of Care Survey 2019, https://pro.genworth.com/riiproweb/productinfo/pdf/282102.pdf