According to the United States Department of Health and Human Services, nearly seventy percent (70%) of people turning age 65 today will need some sort of long-term care as they age, and twenty percent (20%) will need care longer than five (5) years. New estimates predict ninety-one percent (91%) of married couples today will see one spouse needing prolonged care in their lifetime. Despite this, only eighteen percent (18%) of the population owns long-term care insurance.
Of those needing care, around twenty-nine percent (29%) are in a facility. While residents of institutions are generally more disabled than care-dependent elderly in the community, for every institutionalized person over age sixty-five (65) there are twice as many requiring similar levels of care in the community.
Who actually provides long-term care? Great question. There are three (3) main provider sources. The first includes institutions such as nursing homes or assisted living facilities. The second is professional home care. The third is care provided by relatives and/or family members.
Who actually pays for long-term care? The main sources are:
- Your savings and other assets: This would constitute any retirement savings, pension, social security, or the sale or refinancing of any real estate or other assets to fund facility or home care.
- Medicaid: If you do not have sufficient funds to afford long-term care you may qualify for Medicaid to provide funding for Medicaid approved care.
- Relatives: Relatives (most commonly a spouse, siblings, and/or children) may provide financial assistance using their own earned income or savings or more commonly provide part- or full-time custodial care themselves.
How much does it actually cost? Indeed, the better question is how much it WILL it cost when you need it, but, for right now, we can only know what the current cost is and that it is expected to increase exponentially over time. The national average today for an inpatient facility private room is over $105,000 per year and in North Carolina, it is $92,000 per year. The average in-home care ranges from $41,712 - $57,204 per year in North Carolina. These costs are well outside the reach of most seniors leaving two most common payment options outside of LTC insurance, being Medicaid allowable care after income and assets have been depleted or full-time custodial care by close family and relatives.
Given these facts, there are several questions you should ask yourself when considering if you should buy long term care insurance:
- Would you like assurance that you will not have to rely on your spouse, siblings, children, or relatives to provide your daily medical and living needs?
- Would you like the opportunity to choose the best possible care and quality of life should you need long term care?
- If you are able to successfully plan and save a retirement nest egg to enjoy during your golden years would you like to pass along a portion of that to your children and grandchildren during your retirement years and beyond?
If you answered yes to any of those questions you should probably consider discussing long-term care insurance with a trusted advisor. Another important question to ask is are your own parents prepared for a potential long term planning need because they may still be at an opportune time to make important planning decisions themselves.
There are a variety of long-term care planning vehicles including traditional long term care pooled benefit plans and plans using permanent life insurance to fund potential long-term care planning needs. Your individual situation and planning goals will dictate when, what type, and how much coverage to consider. There are many planning options available to meet most scenarios even as the percentage of older Americans continues to grow, putting a strain on the cost of care.
The information contained in this article is general and is provided for educational purposes only. It is not intended to provide legal or tax advice. You should not act on this information without consulting your own legal counsel and/or other knowledgeable advisors.
Beck Smith is an experienced consultant with GriffinEstep Benefit Group who routinely advises business owners on income and asset protection as well as other advanced insurance planning needs. Established in 1998, GriffinEstep is a leading independent, full-service insurance brokerage company with a team of consultants dedicated to clients, not insurance companies. GriffinEstep provides a unique combination of national expertise and local presence along with the knowledge, insight, and technology necessary to customize the individual insurance needs of its valued clients.