In the past few years, more people have become aware of the growing problem of aging, changing health, longevity, and long-term health care. The virus crisis has put long-term care front and center, and many families have experienced it firsthand.
A recent insurance company survey shows that a vast majority of individuals wish to remain at home when they need care; however, they are expecting they will need facility care like assisted living.
Nationwide Financial, a leading company offering long-term health care solutions, completed their ninth annual survey that showed 86% of adult respondents say being in their home for long-term care is most desirable. Not surprisingly, most people have no desire to be in a nursing home.
Rather Die Than Live in a Nursing Home
Nationwide Retirement Institute Long-Term Care survey also revealed that 60% of baby boomers say they would rather die than live in a nursing home. However, many people reveal they know little about funding care costs and available care options.
Other key findings of the survey:
- 56% of boomers expect to be in their own homes when they require long-term health care
- 23% of boomers expect to need assisted living facility care
- 10% of boomers expect to live with a family member and have them provide their care
- 6% of boomers expect to be in a nursing home
- 2% of boomers expect to need adult day care
Health Insurance and Medicare Not Options for Funding Future Care
Health insurance, including Medicare and supplements, pay a limited amount of skilled long-term care services, but most long-term health care is custodial (help with daily living activities or supervision due to dementia) and not covered at all by health insurance, Medicare, and supplements.
Medicaid will pay for long-term care, including custodial care, but you must have little or no income and assets to qualify. Long-Term Care Insurance will pay for all levels of care in all settings, including at home, but you must purchase a policy before your health changes, and you require care.
Most Families are Unprepared for High Costs of LTC
Often, families go into crisis mode when an older parent requires care leaving adult children to become caregivers or find professional care paid for from their parent's savings - creating a financial crisis.
The costs of long-term health care services are rising rapidly because of increasing demand and labor costs that are growing every year. Nursing homes are the most expensive and average over $100,000 a year. Home care and assisted living are more affordable but not cheap and still create a financial strain on families.
The costs will vary depending on where you live. For example, according to the LTC NEWS Cost of Care Calculator, a month of in-home care, based on a 44-hour week, in Charlotte, North Carolina, averages over $4100 a month today. But, in twenty years, that same care is expected to run over $7800 a month - North Carolina Long-Term Care Resources | LTC News.
Base assisted living facilities costs run on average $4000 a month in Charlotte, but that base cost should run over $7400 a month in twenty years. Keep in mind, assisted living facilities will add surcharges on top of the base cost depending on the amount of care you may require.
Compare Charlotte with Bridgeport, Connecticut. Home care in Bridgeport averages over $4800 a month today and over $8000 a month in twenty years. The base assisted living costs averages over $6100 a month today, and in twenty years, it should run about $10,200 a month. If you need a nursing home in Bridgeport, expect to pay at least $16,600 a month today, but in twenty years, that will average over $27,700 a month Connecticut Long-Term Care Resources | LTC News.
You can find the current and future cost of all types of long-term health care services where you live, along with state-specific information on funding solutions, regulations, tax incentives, and available care options by using the LTC NEWS Cost of Care Calculator page - Cost of Care Calculator - Choose Your State | LTC News.
LTC Insurance Helping Most People to Stay at Home
For decades the criticism of Long-Term Care Insurance was it covered only nursing home care, and nobody wanted to go to a nursing home. Yet, since the late 1990s, LTC Insurance has been comprehensive and covers all types of care in all care settings, including in-home care.
Claims data compiled by the American Association for Long-Term Care Insurance (AALTCI), a national advocacy and education group, says most LTC Insurance claims start with in-home care.
According to the Association, about 73% of new Long-Term Care Insurance claims start with the policyholder receiving care in their own home. Some 18% begin their claim receiving benefits at an assisted living facility. Only 8% start benefits in a nursing home. The data is based on traditional LTC Insurance policies constituting most of the policies purchased over the past three decades.
"You buy insurance to protect against real risks and real needs. The risk of needing care in your own home is real," said Jesse Slome, the executive director of the AALTCI.
Need for Long-Term Care Happens at All Ages - Increases with Aging
Advances in medical science keep us alive, but it also has increased the risk of needing help with daily activities or supervision due to a decline in cognitive ability.
The AALTCI notes that 69% of Long-Term Care Insurance policyholders start receiving benefits between the ages of 75 and 89.
Long-Term Care Insurance is medically underwritten and cannot be purchased "when you need it." Premiums are calculated based on several factors, including your age when you obtain coverage, health, family history, and the total amount of available money in the policy. The perfect time to purchase LTC Insurance coverage is before you retire, ideally in your 50s.
"Unfortunately, many people don't do any planning until the need for care is either imminent or already present," Slome says. "At that point, it is too late because insurance companies will only issue policies to those who can health qualify."
According to the AALTCI, the average age for those buying new traditional LTC Insurance remains between 56 and 57.
Confusion with Long-Term Disability Insurance with Long-Term Care
The Nationwide study conducted by Harris Polls seems to suggest that many working Americans are confusing disability insurance benefits provided at work with actual Long-Term Care Insurance.
According to the survey, 39% of millennials claim they own Long-Term Care Insurance. Only 26% of GenXers and 19% of Boomers indicate they own an LTC policy.
Most Long-Term Care Insurance is purchased outside the workplace and is usually unavailable. According to experts, the few available plans typically have minimal benefits and are unsuitable for long-term care planning.
Disability insurance available through the workplace replaces a small portion of a person's salary if they cannot work and is usually not portable if you leave the job. Disability insurance does not pay for any long-term health care.
Several Insurance Planning Options Available
There are several options to prepare for future declining health and the costs and burdens of aging. Most consumers select traditional Long-Term Care Insurance; however, they typically have the most conservative underwriting rules. Every company has its own criteria, and a qualified Long-Term Care Insurance specialist can help you determine both suitability and eligibility.
Traditional policies can also be "partnership certified." Partnership Long-Term Care Insurance offers additional dollar-for-dollar asset protection allowing you to shelter assets based on the total amount of benefits paid by the policy - What is a Long-Term Care Partnership Policy? | LTC News.
There are tax benefits also available - Long-Term Care Tax Benefits Guide | LTC News.
However, a growing number of consumers have an interest in asset-based LTC Insurance, known as Hybrid policies. These policies combine life insurance or an annuity with qualified long-term care benefits. However, they cost much more - but include death benefits. Caution, be sure you only consider a policy that meets federal guidelines under Section 7702(b) of the U.S. Code. There are several consumer protections in any policy that meets 7702(b) guidelines that are vital to the policyholder - Are All Long-Term Care Insurance Policies the Same? | LTC News.
Some states also offer limited duration or 'short-term care' plans that offer limited benefits but have more relaxed underwriting rules.
Planning before the crisis will be easier on your family and your finances. We see changes in our health, body, mobility, and mind as we grow older. The goal is to plan before these changes limit your options or become too expensive to consider.
About the Author
An LTC News author focusing on long-term care and aging.
Contributor since August 21st, 2017
The costs and burdens of aging are a reality for many families in the U.S. and worldwide. Ignoring the problem today means a crisis for your family tomorrow. There is a better way for you, your family, and your finances.
When you own a Long-Term Care Insurance policy, you own a solution. However, don't delay. Your fairly good health today gives you the option to plan.
Affordable Long-Term Care Insurance gives you control and helps you avoid dependence on your loved ones. They, in turn, will have the time to be family instead of caregivers.
Available Resources on LTC NEWS
LTC NEWS offers several tools and resources to help you in your research for a planning solution or help your family find the appropriate care for a loved one at the time of crisis.
To help you plan for the future costs and burdens of changing health and aging, LTC NEWS has put in place several resources, including:
- The Ultimate Long-Term Care Guide is an outstanding read to help you get a good overview of the topic area.
- Compare the major insurance companies that offer Long-Term Care Insurance products here - Top Insurers for Long-Term Care Insurance | LTC News.
- A detailed tax guide that includes available tax incentives can be found by reviewing the Long-Term Care Tax Benefits Guide.
Find all the resources on LTC NEWS - Resources for Long-Term Care Planning | LTC News.
Seek Professional Guidance
Experts suggest using a qualified Long-Term Care Insurance specialist to help you navigate the many options available to you and your family. Insurance rates are regulated, so no insurance agent, agency, or financial advisor can give you special deals. However, premiums do vary over 100% between insurance companies for the same coverage.
A specialist who works with the top companies can match your age, health, family history, and other factors and find you the best coverage at the best value. A specialist will save you money, and you will have the peace of mind knowing they are making the appropriate recommendations - Work With a Specialist | LTC News.
Find Quality Caregivers and Long-Term Care Facilities
If your parent or loved one needs care now - or soon - you will need to find the appropriate care in the right setting depending on their needs.
Take a moment and read -
Benefits of Reverse Mortgages
Today's reverse mortgages for those aged 62 and older could be an ideal resource to fund a Long-Term Care Insurance policy OR even provide money to pay for care if you, or a loved one, already needs help and assistance.
Some people have much of their savings invested in their homes. With today's reverse mortgages, you can find ways to fund care solutions, care itself, even help with cash flow during your retirement.
Learn more by asking questions to an expert. LTC NEWS columnist and host of the TV Show "62 Who Knew" will answer your questions regarding caregiving, aging, health, retirement planning, long-term care, and reverse mortgages.
Just "Ask Mike." - Reverse Mortgages | LTC News.
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