November marks Long-Term Care Awareness Month, a time to raise awareness and understanding about long-term care. We also celebrate Thanksgiving this month – a time for gathering with loved ones and reflecting on the significance of family connections.

When we think about family and people we love, although not as pleasant of a topic as Thanksgiving, we think about long-term care and the need for it. I have several stories about long-term care in my family.

My grandmother, Grandma Betty, ended up in a nursing home for the last few years of her life. She was taken care of for a while by my uncle. When he couldn’t do it anymore, she ended up in a nursing home. She did not have long-term care insurance and was on Title 19. My grandfather, her husband, Maury, also ended up in a nursing home at the end of his life. My parents ended up in assisted living.

Many of us are familiar with someone in our lives, whether it be a family member, a friend, or even the next generation, who has found themselves in a situation where long-term care becomes necessary.

Long-Term Care Statistics

Let’s talk about some sobering statistics and then explore some existing solutions. As we enjoy longer lives, it becomes increasingly important to consider the potential need for long-term care. For instance, if I were speaking with a couple both aged 65, there is a 70% chance that at least one of them will require long-term care before the end of their lives.

That 70% is a pretty sobering statistic. What that means is almost all of us have to consider our options here and do some planning. Let’s discuss who really gets hurt in the process of somebody needing to pay for long-term care.

I’ll use myself as an example. I’m married to Wendy. And if I need long-term care, it’s her that gets hurt financially, not me. If I’m in a nursing home, I’m going to get the same level of care whether I’m dead broke, on Medicaid, have lots of money to self-pay, or if I have insurance. But her lifestyle is going to be affected when she’s not in the nursing home and our savings are going to pay for my nursing home care.

Let’s consider an average couple from the Northeast as an example. The cost of long-term care in Connecticut is approximately $166,000 per year, while in Massachusetts, it is around $132,000. Now, let’s assume we have saved a million dollars for retirement and that my care costs amount to $150,000. With our retirement savings and care expenses factored in, it won’t take long for our million dollars to start going down, down, down.

Think about what that does to Wendy psychologically. She has me in the nursing home, money being spent that she hoped to leave to our kids and grandkids someday, or she might be worried about running out of money. And it’s not just about running out of money; it’s the thought that’s going through her mind and the impact it has on her quality of life. Surprisingly, long-term care can be a greater challenge for those who don’t enter nursing homes compared to those who do.

I want to reiterate those statistics I mentioned. In Connecticut, the average cost of long-term care is $166,000 per year. Meanwhile, in Massachusetts, the average cost of long-term care amounts to $132,000 per year. And we’re all living longer. Medical science has created amazing ways to keep us alive, to improve our health. However, there may arise a situation where either someone you know or even yourself may require long-term care for an extended period of five, ten, or more years. This is the challenge with long-term care.

So, I’ve discussed the problem. I’ve discussed the challenges, especially that emotional burden on the family. Let’s talk a little bit about the different options that we have.

What are My Different Options?

Now, you can always self-insure, right? We’re going to talk in a minute about insurance and different legal planning, and so on. But let’s just get this out of the way. You can self-insure. If you have enough money, or if you just want to take a gamble, you can say, “You know what? If I end up needing long-term care, whether it’s in my home or in a nursing home, I’m just going to write the check.” And if you have a lot of money, it might not even put a dent in your savings. You might not even spend any money down because you might end up just paying for it from the interest. So, you could always self -insure. Most people don’t want to do that, again, unless they’re quite wealthy.

Another alternative is seeking the assistance of an attorney who can establish trusts or entities. By transferring funds into these trusts, you no longer “control” the money. I say control in quotes because if you don’t control it, you don’t own it. And if you don’t own it, you could qualify for Title 19 or Medicare earlier. So, these are ways to trigger a qualification for Medicaid or Title 19 if you end up using all your other money.

But what you’ve put into the trust, whether it’s a house or assets, has been protected. For some people, this is a very good option. Other people might not want to take that option. So again, we’ve talked about self-insuring or going to see a good elder care attorney. By the way, you can use combinations of these options.

The third one is we want to give money away. So again, if we don’t own something, then we can’t use it to spend on our long-term care. We could give away all our stuff and all our money in our home and not own anything. And then if we go into a nursing home, Medicaid or Title 19 has to pay for it, OK? Here’s the problem with that. I have four boys. If we give away all our assets to those boys, I know one of them is going to end up with a bunch of cars and no money left very quickly. I can’t call him and say, “Hey, we want to take a vacation. Give me some money back.” Because he will have spent all the money. Not all the boys are like that, but certainly one of them – I won’t give his name – is like that.

So, there may be a challenge when it comes to reaching out to your children for financial support if you give away all your assets. Alternatively, you have the option of purchasing traditional long-term care insurance.

Traditional Long-Term Care Insurance

What are we talking about here? We’re talking about getting rid of risk by buying insurance. If we self-insure, I’m keeping risk myself. When we buy insurance, whether it’s auto insurance, homeowners’ insurance, we’re paying a premium and we’re getting rid of that risk. So, if I buy traditional long-term care insurance, I’m writing a check every year to the insurance company, and they are taking that risk away from me and saying, “If I end up in a nursing home, they will pay that bill.”

The issue with traditional insurance is that while there are many advantages to it, one of the downsides is that if you never actually require it or file a claim, all the premiums you’ve paid are essentially wasted. Once again, it’s not a bad option. It’s an alternative that you should consider, but it’s important to fully comprehend one of the main concerns when it comes to purchasing this insurance. Many times, the premium for a couple can amount to $10,000 or $12,000. The drawback is that if you never require long-term care, that money is essentially lost, which brings me to the last type of insurance.

The last type of insurance is this newer hybrid option. You’re still buying long-term care insurance, will pay that monthly bill, but if you don’t need it, you get the money back. What do I mean by that? Well, it’s a long-term care policy wrapped up in a life insurance policy.

So again, if you require long-term care, the bill is covered. If you don’t need long-term care and pass away, your family receives a full refund of the premiums paid, with added interest. And if you ever need the money out yourself, you change your mind and say, “Hey, I want that money back.” There are certain types where you can get all the money that you paid in premiums back.

There are a lot of different options. I know that might be a little confusing, but I wanted to let you know that there are several options to help plan for this long-term care.

Plan Now

Now, here’s the thing. You’ve got to plan for it now. I don’t care if you’re 45 years old, 65 years old, or 80 years old. If you haven’t had this conversation and made some decisions, you’ve got to do it. Why do I say that? Because the longer you wait, the more options you lose. You might get sick. You might have some knee problems or some arthritis, which, believe it or not, could prevent you from getting long-term care insurance.

Make the decision as early as possible. Explore all the options. It doesn’t mean you have to get pushed into one or the other, but the time is now to look at all those different options and explore those different options.

To summarize, long-term care poses a significant challenge. Approximately 70% of individuals aged 65 or older are affected by this issue. With costs between $166,000 down to about $132,000 here in the Northeast, it can be a big problem.

Statistically, somebody in your family might need it. And in addition to that, the cost is very high. We’re all living longer, so we might end up spending more time in that nursing home.

We have a few different options; you can self-insure, you can go see an attorney and do some gifting and trust work, or you can buy traditional insurance. And the longer we wait, those options go away. So, what I would encourage you to do is talk to an expert, walk through your long-term care options, and make a decision now. Even if it isn’t the ideal decision, you’ll have the peace of mind of knowing you’ve addressed these issues now, and you can move forward knowing you’ve addressed it and have a plan in place.

But not knowing or continuing to think about this every year or two is a big problem. I mentioned my mom and dad who went to a continuing care facility. I actually went out to Iowa with them and helped them sign the contract. Continuing care is a sort of long-term care. You pay rent, but your rent is way over-inflated because there’s sort of this nursing home insurance built into it. From the time we signed the contract to the time they were to move in, my dad passed away. Once my dad passed away, my mom, who then moved into the facility, went down very, very quickly and needed those levels of care.

We were so grateful, and either myself or my brother were able to visit her almost every day. She was in a place where they had fully skilled nurses, doctors on staff and so on, because she began to fall. It was just a real blessing that we had planned ahead. So, I would encourage you to do that. My grandparents didn’t do that. My parents did. And now that I’m getting into my sixties, it’s something that Wendy and I have done also. I would encourage you to get the information, make your decision, and have peace of mind.