Long Term Care

1 to 3 Years Is How Long You'll Likely Need It

Another important thing to understand is that when we need long-term care, the period of time we need it for is typically about one to three years -- which might be a much shorter period than you assumed. My mom has had care givers for about 10 years and is living at home. She is paying $20-23 an hour to some of her caregivers. Her long term care is only reimbursing her 80% of the cost, to legally documented workers.

That information can help you plan and save for retirement, and for any possible long-term care needs, but remember that the numbers above are averages. Some people will need long-term care for much longer periods, and some for significantly shorter periods. (A 2017 AARP report estimated that about 14% of people will need long-term care for more than five years.) Insurance policies are typically available, covering you for between one and about six years of care. My Dad’s had a brain hemorrhage at age 68. He never went back to work. After 18 months my Mom found a care giver for my Dad. Who died of liver cancer at age 78. My Mom say’s having LTC insurance for my Dad saved her life!

15.2% Will Spend $250,000 or More

This bit of data is likely to make your eyes pop: 15.2% of people who turn (or turned) 65 between 2015 and 2019 will spend more than $250,000 on long-term care during their lives, according to a 2016 report from the National Association of Insurance Commissioners (NAIC).

Making matters worse is the fact that most of us are likely to spend another big bundle on healthcare in retirement: A 65-year-old couple retiring today can expect to spend an average of $280,000 out of pocket on healthcare expenses (not including long-term care, over-the-counter medicines, or most dental care) over the course of their retirement, per Fidelity Investments.

Clearly, whether you opt for long-term care insurance or not, you should have some kind of plan for how you'll pay for healthcare and long-term care in retirement, and you'll need to execute that plan successfully. Ignoring your future healthcare needs can be disastrous to your financial health. Don’t assume your children will be willing to change your diapers! Talk to them! Are you a veteran? What will the VA provide?

Here are a few more illuminating numbers:

• The median annual cost for five days a week of adult day care was recently $18,200, per a 2017 Genworth report.
• The median annual cost of an assisted-living facility was recently $45,000.
• The median annual cost of a semiprivate room at a nursing home was recently $85,775.
• The estimated lifetime cost of care for someone with dementia is $341,840, per the Alzheimer's Association.




A Typical Long-Term Care Annual Premium Costs $3,490

The last stat to know is that long-term care insurance is expensive. It's likely more expensive than you thought, but for many people, it is still affordable, and there are signs of relief, too.

The Long-Term Care Insurance Price Index (LTCIP) for 2018 finds that a 60-year-old couple who buy a new long-term care insurance policy will pay about $3,490 in their first year for a policy offering a potential benefit of more than $666,000 for coverage they begin needing at age 85. That's actually down from the 2017 rate of $3,790.

Costs can vary widely, though, and so will the precise benefits offered in any given policy. Some, for example, will cover just nursing-home care, while others cover both nursing-home care and home healthcare.



Good Long-Term Care Insurance Strategies

Given all of the information above, what should you do? Well, definitely spend some time thinking about whether you would be well served by long-term care insurance, and decide whether and when you want to buy some. Then, shop around for the best rates and the best coverage. (You usually can’t buy it after age 72 or 74 or are not in good health)

Know that while long-term care insurance is a smart buy for many, it's not best for all. If you're quite financially challenged, you may not be able to afford the insurance as you're socking away any available dollars for retirement. And if you're very financially comfortable, you may be able to simply pay out of your pocket for any long-term care needs that arise. Thus, it's those folks in the middle, who would be squeezed by significant long-term care costs and who can afford the insurance, who should consider buying it.

I also sell a short term recovery care that can cover you in a skilled nursing facility or home for up to 1 year that would give you time to sell your home and use the profit from your home to pay for assisted living or a skilled nursing facility.

One great way to keep the costs down is to buy your policy early, while you're still relatively young, as it's much more affordable then. You might also be able to add a long-term care rider to your life insurance policy. (My husband and I bought policies in our 40’s with inflation options. It is still affordable.)

Another smart move to consider is "self-insuring." This is when you regularly sock away money for your possible long-term care needs. If you end up needing the money, you'll have it. If you don't, it can be spent in other ways or left to your loved ones. One way to do this is through a Health Savings Account. Your bank can usually open one up for you.

Finally, be sure to check with your employer, as many companies offer long-term care policies to their employees, and those policies can often be kept even after you no longer work for them. I offer a variety of long term care policies from several carriers. I also offer life insurance policies with rider for LTC, critical or chronic illness. If you want to “hedge your bets” a whole life insurance with a rider for the “what ifs” is the best way to go but it gets expense the older you get. Call me for a free consultation.