Long-Term Care Costs Increasing Due to Higher Demand. Families Face Stress and Anxiety.

There are 158 million people in the U.S. ages 40+ preparing for hopefully a future successful retirement. The problem of long-term health care can be financially devastating, creating family stress and anxiety. Being prepared is a critical part of retirement planning.

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Long-Term Care Costs Increasing Due to Higher Demand. Families Face Stress and Anxiety.
9 Min Read April 3rd, 2020 Updated:November 14th, 2021

According to a recent report from the American Action Forum, in just ten years, an estimated 24 million Americans will need long-term care services and supports. The report says that as Americans get older, there will be an increased rate of chronic health issues, and these forces will drive up these costs over the next few decades.

In fact, increasing demand for long-term care services and labor shortages have increased labor costs, making care costs even higher.

America is getting older. With Generation X (born between 1965 – 1979), Late-Boomers (born between 1956 and 1964), and the remaining baby boomers, 158 million Americans are getting older and facing a higher risk of needing long-term care services.

People require long-term care due to an illness, accident, or the impact of aging. With advances in medical science, we have seen greater longevity. However, this means more people will need help with what are known as "ADLs" – activities-of-daily living. Plus, as we reach certain age milestones, there is a higher risk of cognitive decline that requires supervisory care.

Can't Depend on Health Insurance or Medicare to Pay for Extended Care Costs

Health insurance, including Medicare and supplements, will not pay for most of this type of care. We are already in crisis as not enough people have planned for the financial costs and burdens that come with getting older.

Medicaid will pay for long-term health care, but you must have little or no income and savings, and you must use Medicaid providers.

According to Health Affairs, 54% will not have sufficient funds to pay for this care. Most families are forced to use family caregivers. These family members who provide care are unpaid but provide almost 80% of long-term care services at home, according to the U.S. Department of Health and Human Services.

Those who own Long-Term Care Insurance have guaranteed tax-free resources to pay for care. In 2020, according to the American Association for Long-Term Care Insurance, the major insurance companies spent $11.6 billion in benefits either for care at home or in adult day care centers, assisted living facilities, memory care centers, and traditional nursing homes. 

However, you must obtain Long-Term Care Insurance coverage before your health fails as, like with life insurance, you must have reasonably good health to meet the underwriting requirements. 

Demand for Long-Term Care Services Increasing Dramatically

The report indicates that supply and demand for long-term care are "moving in opposite directions." It says as the population ages, the need for services will increase. Many experts say that demand is more than just demographics. 

Research and Markets report said, "The U.S. health care industry continues to evolve in response to ongoing cost containment imperatives, aging of the population and relatively low rates of wellness within large segments of the general public (obese persons, people with diabetes, persons with addictions, etc.). This is leading to increased utilization of all forms of long-term care."

American Families Face Many Challenges Caring for Loved Ones

So as demand for long-term care services grows, the financial and emotional impact on American families will increase. The American Action Forum report says that by 2050, the number of people aged 85 or older will triple. The number of people using paid long-term care services in any setting will nearly double from 14 million in 2018 to 27 million. 

Yet, despite these facts and common sense, many Americans ignore the problem of longevity. Even those people who have planned well for their future retirements tend to ignore long-term care risks. 

Even in a good economy, the cost of long-term health care can adversely affect income and drain savings, changing lifestyle and legacy. Inflation, downturns in the economy, or world events can happen at any time, placing more financial stress on a family when attempting to fund professional care. 

Matt Mccann"When you see markets drop, as we have numerous times before, being dependent on your assets to pay for future long-term care is problematic. We see normal swings in the markets, but on occasion, an unanticipated event, like the COVID-19 crisis, can devastate assets, at least in the short term," said Matt McCann, a nationally recognized Long-Term Care Insurance specialist. 

McCann noted that there is no ability to time the markets or your need for future long-term health care. If you are forced to sell assets to pay for care when the markets are down, you may be selling at a loss. Often, your 'loss' may still be a taxable gain.

LTC Insurance Offers Guaranteed Benefits and Access to Quality Care

McCann said the guaranteed tax-free benefits of a Long-Term Care Insurance policy give you access to your choice of quality care in the setting you desire, including in-home care. However, LTC Insurance does more than just give you access to quality care options. 

Long-term care is both a cash flow issue and a family issue. The resources from a policy allow you to safeguard your assets, but in addition, it reduces the stress and anxiety otherwise placed on those you love.

Despite being untrained and unprepared for the role, family caregivers are often the first line of caregiving. McCann says as demand for all types of long-term care services, including in-home, increases, the cost of care will increase, making LTC Insurance even more critical.

Not only do people with Long-Term Care Insurance get access to quality care, but they also tend to get the appropriate care sooner, providing them with a better quality of life.

 

Jenny Novy"My clients with LTC Insurance are more likely to get help earlier, which often leads to a quality life for both the client and the family. The LTC insurance policy gives the client options when care is needed and can sustain care in the home for a much longer period of time," said Jenny Novy, President of Amada Senior Care in suburban Chicago. 

Amada Senior Care provides a variety of home care services nationwide. They also help their clients process Long-Term Care Insurance claims to simplify their clients' families.

 

LTC Insurance is Affordable Income and Asset Protection

McCann says that despite some talk to the contrary, Long-Term Care Insurance is very affordable, but premiums can vary dramatically between companies for the same coverage. Plus, too many insurance agents and financial advisors recommend products or design benefits that are not appropriate.

"Recently, I spoke to a couple in Texas in their 50s who were told Long-Term Care Insurance would run about $8000 a year. This premium quote was for a traditional partnership plan, not a hybrid asset-based policy with a death benefit. The actual cost was a fraction of that. To say the least, they were delighted," he said.

The cost of care is expensive and is increasing every year. Most of the cost is labor, but the labor costs will continue to grow in the decades ahead based on supply and demand.

Cost of Extended Care is Expensive and Rising

According to the LTC NEWS Cost of Care Calculator, skilled nursing home costs are the most expensive. While skilled nursing is the least used type of care service, it is costly. The national average cost of a nursing home is currently over $100,000 a year. 

All other care, including home care, is costly and getting more expensive.

In twenty years, the costs of long-term care services will be substantially higher. Failing to plan for this fact will be devastating to your lifestyle and legacy.

The cost of care does vary depending on your location and the type of care you are receiving at the time - Cost of Care Calculator - Choose Your State | LTC News.

To cover these higher costs in the decades to come, you either need inflation benefits on a Long-Term Care policy or have set aside a substantial amount of your own money and hope it is enough.

There are federal tax incentives for some people and, in some states, state tax advantages available when you purchase a Long-Term Care Insurance policy. In 45 states, unique Partnership Long-Term Care Insurance policies are available that provide additional asset protection. 

Many states also have rate stability rules in force, making it difficult for future rate increases on these policies. Find your state by clicking here.

Expert Tips for LTC Planning

Experts suggest planning in advance for future long-term care costs. For many, this could be Long-Term Care Insurance. Use the following tips:

  1. Seek the help of a qualified Long-Term Care Insurance specialist. There are not many, but some do work virtually, which in the COVID-19 world makes research and shopping more relaxed and healthier. Be sure they represent many companies and understand policy design, underwriting, claims, and the partnership program.
  2. Be sure to have a policy with inflation benefits. Avoid any plan which only gives you an option to "buy" more insurance. You should also avoid a plan which increases benefits only by the Consumer Product Index (CPI). Some states require at least 3% compound inflation for partnership certification.
  3. Ideally, obtain a policy in your 40s or 50s when you still enjoy good health and could qualify for preferred health discounts.
  4. Be sure to ask if your state offers partnership policies. For most people, a partnership plan is the best option. However, a hybrid policy with a death benefit or a limited duration short-term policy may be appropriate. 
  5. Be sure the agent asks you many questions about your health, family history, retirement plans, and finances. Without that information, they can't provide you with accurate quotes and professional recommendations.
  6. Research both the current and future costs of long-term care services where you live. Use the LTC NEWS cost of care calculator by clicking here.

Planning for Long-Term Care is About Family

We often think about long-term care planning as asset protection. While that is true, the big benefit of having an advance plan in place is to ease the stress and burden on those you love.

It is your family that would otherwise be responsible for either providing your future care, managing paid caregivers, and selling off your assets, or both.

There are physical, emotional, and financial burdens that loved ones face when you, in the future, require long-term care.

It is easy to ignore something you may think will never happen to you. However, every research study shows that you are more likely to need some type of long-term health care service as you get older. We see declines in our health, body, and mind as we get older.

You will either pay for the care out of your income and savings, have your family become caregivers or both - unless you have an advance plan that includes an affordable Long-Term Care Insurance policy.

You will enjoy more than just asset protection and quality care when you need it. You, and your family, will enjoy peace of mind, control, and independence. 

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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

You can't ignore getting older. Your health and body are not like it was 25 years ago. The decline in health, body, and mind increases the need for help with daily living activities or supervision due to memory loss.

Avoid a family crisis in your family and give your loved ones the time to be family instead of caregivers. The solution is affordable Long-Term Care Insurance. You will have guaranteed tax-free benefits, giving you access to your choice of quality care in the setting you desire.

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 can put together several resources, including:

Find all the resources on LTC NEWS - Resources for Long-Term Care Planning | LTC News.

Seek Professional Advice

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 - 

Get Expert Help Filing an LTC Insurance Claim

LTC NEWS provides free assistance with no obligation to help you, or a loved one complete the claim's process with your Long-Term Care Insurance policy. You can also support finding quality caregivers and get recommendations for a proper care plan, whether a person has a policy or not. - Filing a Long-Term Care Insurance Claim | LTC News

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.

LTC NEWS - Your Marketing and Advertising Partner

Use LTC NEWS to drive traffic to your website and help you attract people interested in your products and services. Plus, you can improve your website's SEO so more consumers can find you when they search for your products and services.

There are various marketing options available with LTC NEWS. Traditional advertising, sponsored content articles, and strategic alliances, and more are available. 

Learn more about how LTC NEWS can help you market your business, drive traffic, and improve SEO - Advertise With Us | LTC News.

Share Your Knowledge - Be A Guest Contributor for LTC NEWS

LTC NEWS is open to contributors to share their stories with the world. 

You can write a story or ongoing column for LTC NEWS. You can write about many topics, including aging, caregiving, health, lifestyle, retirement planning, and long-term care, to name a few.

Be sure to write for our core target audience of adults aged 40 and older. Our audience is worldwide; however, our primary target is the United States, Canada, the United Kingdom, and other English-speaking nations. 

Improve your website or blog's SEO and gain exposure and traffic at the same time by being a contributor to LTC NEWS. 

You can even promote yourself, your business, and your website or blog. However, it must have editorial content exclusive for LTC NEWS and cannot be just an advertisement. It can include links to other sites, and you can share the article link once published on your website or social media.

Email your story idea or article: newsroom@ltcnews.com - LTC News Contributors | LTC News

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LTC NEWS offers a 'helpful links' page so readers looking for additional information can find them easily. You can get a dofollow link to your website on LTC NEWS in exchange for a dofollow link on your site.

Let's work together and help consumers who search for us on the web - Site Request | LTC News.

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Include LTC NEWS in your press release distribution. If your group, organization, business, political committee, etc., have news to share, send it to LTC NEWS. Email - newsroom@ltcnews.com

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