Long-Term Care Insurance And The Importance Of Developing A Plan
Created: January 15, 2018
Modified: April 22, 2022

Long-Term Care Insurance And The Importance Of Developing A Plan

Long-term care insurance provides care for those who need long-term assistance in a nursing home, care at home, or adult daycare. What it also provides, though, is peace of mind that you or your loved ones will be able to afford the help that might have been provided by family or friends in years past. Although long-term care insurance has been around since the late 1970s, its popularity emerged during the 80s and ’90s.  With more and more Americans needing this service, it is important to be informed of your options. While Medicare covers only short stays in a nursing facility, Medicaid can fill in the gap but only after you have depleted your financial accounts. Therefore, if you envision an assisted living center as your future home, you will need the necessary resources to fund this option. Are you prepared?

As mentioned earlier, long-term care insurance covers you if you need care in your home or in a nursing home. Specifically, it includes a variety of services aimed at helping individuals accomplish the Activities of Daily Living (ADLs) which include bathing, dressing, continence, eating, toileting, transferring oneself from a seated to a standing position, and getting in and out of bed. There are varying levels of long-term care dependent upon each person’s assistance level needed.

Some factors to think about:

1. There are 75,400,000 aging baby boomers in the United States.

Americans are living much longer lives due to many advancements and improvements over the last few decades. Even though genetics play a major role in our health longevity, genetic screening and advancements in diagnostics over the last few decades have changed the landscape dramatically. One example is the role of genetic screening in women whose test results indicate a near-certain risk of breast cancer. Based upon that diagnosis, thousands of women can now elect to undergo a preventative single or double mastectomy, thus potentially saving their lives from the devastation of cancer.

Baby boomers have also benefited from organ transplantations which are now fairly mainstream procedures at hospitals around the country. Heart, liver, or kidney surgeries are performed saving thousands of lives every year. In addition, an overall health-conscious society has also helped contribute to individuals living longer lives. Smoking, once considered a favorite pastime, has lost a little bit of its luster due to research emphasizing the many risks involved.

2. 7 in 10 Americans 65 or older will need some type of long-term care.

While we may be living longer, older individuals are not necessarily living healthier, more active lives. And, studies have shown that 40% of individuals will need long-term care for two or more years. The health and well-being of an individual affect everyone in the family. The true impact on the quality of life for caregivers can be compromised very quickly. 77% of caregivers missed time off from work and close to 1/3 of caregivers provided more than 30 hours of care per week.

3. The median U.S. annual private room nursing home cost in 2016 was $92,378.

Costs for assisted living facilities are substantially less than private nursing homes, but at an approximate cost of $45,000 per year, those figures still have an extremely steep price tag if you haven’t planned accordingly. And, it is important to note that this cost is per year and could be significantly higher in various geographic areas like the Northeast. For example, in my state of Connecticut, costs for assisted living facilities could be close to $55,000 per year and upwards of $160,000 per year for private nursing home care.

4. $166,845 is the projected median U.S. annual private room nursing home cost in 20 years.

Although no one can really predict the exact costs of long-term care in 20 years, the estimated or projected costs are enough for people to stop and take notice. It is so important for families to have these conversations early on and not wait until it is too late to do something productive regarding their future.

There are both traditional and hybrid long-term care insurance options. What’s right for you differs for each individual and family. There are many positives involved in purchasing long-term care like receiving quality care, maintaining your independence, and reducing the stress and financial impact placed on family. However, the costs of premiums can be expensive and therefore may be prohibitive for many individuals. Therefore, it is important to start the conversations early with family and develop a plan moving forward or you may want to speak with a retirement professional to help assess what’s best for your individual financial situation.

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