Inflationary Pressures Underscore Importance of Proactive Long-Term Care Planning

Inflationary pressures highlight the critical need for proactive long-term care planning, as rising costs can significantly impact the affordability and accessibility of care services. Advance planning helps individuals protect their finances and secure access to quality care, even in an uncertain economy.

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Inflationary Pressures Underscore Importance of Proactive Long-Term Care Planning
4 Min Read February 14th, 2024

Soaring inflation, with essential expenses like food and energy exceeding expectations, serves as a stark reminder for individuals and families to prioritize proactive long-term care planning. With an overall inflation rate of 6.4% in January 2024, the rising cost of living presents significant challenges for managing future care needs.

According to the U.S. Labor Department, the consumer price index (CPI), a critical measure of inflation, indicated a 3.1% rise in January compared to the same month the previous year, marking a decline from December's 3.4% rate. The CPI tracks the price changes for a wide range of items, including groceries, personal care services, entertainment, and home appliances, throughout the U.S. economy.

Worrying figures show that food and energy costs have surged by 10.4% and 8.7%, respectively. Such increases directly affect the expenses associated with long-term care services, meaning that the costs of assisted living facilities, in-home care, and nursing homes are expected to keep climbing.

Increasing Labor Costs

Meanwhile, labor shortages are expected to increase labor costs in long-term care. The home health and home care sector is grappling with a pronounced labor shortage, especially in roles filled by caregivers and nurses, a situation projected to worsen by 2024. Despite the workforce for direct care workers—including roles like personal care aides, certified nursing assistants, and home health aides—more than doubling since 2000, the supply is still not meeting demand. 

According to the U.S. Bureau of Labor Statistics (BLS), the industry is expected to add a million new home health and personal care aide positions by 2031, yet it faces challenges in adequately filling these essential roles.

As the population ages and advancements in medical care extend life expectancy, the demand for long-term care services is on the rise. This increased lifespan, however, brings the need for more assistance with daily living activities or supervision for conditions like dementia.

NIC MAP market fundamentals data from January reveals that senior living occupancy rates rose for the 10th consecutive quarter in the last quarter of 2023, indicating a trend toward reaching pre-pandemic levels by the latter half of this year.

McKnight's Senior Living highlights that in the primary markets during the fourth quarter, the demand for both assisted living and independent living properties surpassed supply, contributing to higher occupancy rates.

Paying for Care is Challenging

The LTC NEWS Cost of Care Calculator provides insights into the present and anticipated future costs of long-term care services across the country, broken down by metropolitan areas within each state. Costs fluctuate based on location and the specific types of services provided.

Exacerbating the challenge of long-term care is the issue of funding. Health insurance, including Medicare and supplements, covers only short-term skilled services and does not extend to long-term care. Furthermore, these insurance options do not cover custodial care, such as assistance with daily living activities or supervision for cognitive impairments, which most individuals need long-term care.

Medicaid coverage for long-term care services is restricted to individuals with minimal income and assets, presenting a significant limitation for many. In contrast, Long-Term Care Insurance covers various types and levels of care comprehensively. However, obtaining these policies is contingent upon medical underwriting, making it impossible to acquire coverage if care is already needed or if the individual is in poor health. 

Typically, Long-Term Care Insurance is acquired between the ages of 45 and 65, a period when premiums are more affordable, and an individual's health is usually better, offering a strategic window for securing future care.

As the costs of in-home care and assisted living continue to surge, and nursing home expenses already averaging over $100,000 a year, the absence of foresight in planning for long-term care can lead to significant financial strain on American families.

Many states participate in the federal/state partnership program, yet many consumers and financial advisors remain uninformed about them. A Partnership Long-Term Care Insurance policy is a unique arrangement that allows individuals who purchase qualifying Long-Term Care Insurance to protect a portion of their assets equal to the benefits paid out by the policy. 

This means that after the benefits from the insurance policy are exhausted, the policyholder can apply for Medicaid without having to spend down all their assets, as typically required, thereby offering additional financial protection.

The challenge of escalating long-term care costs is set to intensify with the rising demand for services and the continuous increase in expenses. Although a greater number of individuals are exploring Long-Term Care Insurance than before, many procrastinate or neglect to make timely decisions, thereby shifting the financial and caregiving burdens of future long-term care onto their families and personal finances.

Federal and state tax incentives are available to encourage individuals and businesses to purchase Long-Term Care Insurance. Additionally, some states are exploring the implementation of state payroll taxes to finance programs for individuals without a qualified LTC policy. 

Regardless, consulting with a qualified Long-Term Care Insurance specialist can offer tailored information relevant to your specific situation, ensuring you understand the benefits and potential tax advantages of securing an LTC policy.

If you're currently facing the challenge of finding quality care for a loved one or anticipate needing to do so in the near future, navigating the options can be daunting. The LTC NEWS Caregiver Directory simplifies this task by offering access to a database of over 80,000 care providers nationwide. This free and extensive directory streamlines the process of securing reliable care for your loved ones, making it more manageable.

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About the Author

An LTC News author focusing on long-term care and aging.

LTC News Contributor James Kelly

James Kelly

Contributor since August 21st, 2017

Editor's Note

Growing older often brings concerns about the potential need for long-term care, a prospect that can be daunting for both you and your family. However, there's a solution many are turning to: Long-Term Care Insurance. This coverage acts as a safeguard, protecting you from the financial burdens and emotional strains of long-term care. It serves as a protective barrier, ensuring you and your family can maintain financial and emotional well-being, allowing your loved ones to support you without the added pressure of caregiving roles.

Seek a Qualified Specialist to Help Shop

To navigate the many options in Long-Term Care Insurance, it's advisable to consult with a qualified specialist. These professionals can guide you through the various policies, helping you find one that aligns with your age, health, and financial situation. While most people secure this coverage in their 40s or 50s, affordable options are available in your 60s and beyond, depending on your health and other factors.

An experienced, independent LTC Insurance specialist will help match you with the right insurance company, assist with policy design, and provide accurate quotes from all the top-rated insurance companies so you can decide. 

Long-Term Care Insurance is a proactive step in safeguarding your family's well-being and financial security. As you plan for the years ahead, consider how an LTC policy can be vital to your long-term care strategy.

Finding Quality Caregivers

Resources like the LTC NEWS Caregiver Directory offer invaluable assistance for those seeking caregivers for older family members. The directory is a free, comprehensive national database with a wide range of long-term care services, simplifying finding qualified caregivers or appropriate care facilities. You can search for providers where you or your loved one lives and read about their qualifications and options. 

For those with an LTC policy, LTC NEWS can help process claims from any Long-Term Care Insurance policy. LTC NEWS, in partnership with Amada Senior Care, a nationally recognized in-home health care agency, ensures that you and your loved ones receive the quality care you deserve. This service comes at no cost or obligation - Filing a Long-Term Care Insurance Claim.

These four LTC NEWS guides will assist you in trying to find appropriate long-term services for a loved one:

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