Long Term Care (which is separate from your Health Insurance) is designed to specifically cover the cost of care related to your health if you are not able to take care of yourself.
This extra care could be needed as the result of a major health setback such as a heart attack or stroke, or the need for care can develop slowly as you get older, especially if you have an ongoing health condition or disability.
It could also arise if you are not cognitively able to take care of yourself, due to things like Dementia or Alzheimer’s.
Long Term Care helps an individual perform what is known as Activities of Daily Living (ADLs). There are six basic ADLs: eating, bathing, getting dressed, toileting, transferring, and continence.
So things like getting in and out of bed, bathing, getting dressed, using the toilet, moving around, etc.
Usually, to use your Long Term Care Insurance, a person must not be able to perform 2 out of these 6 functions.
Here are some sobering statistics about long term care:
- 70% of people over the age of 65 need some type of long-term care at some point in their lives.
- But what’s interesting is that more than half of those looking for these services will need it for less than 3 months.
- 40% will enter a nursing home at some point in their lives, but the question is how long will they stay.
- The average stay, once someone is in, is around 272 days.
- There is 1 claim for every 2.5 Long Term Care policies purchased (in other words, people buy and then use these policies!)
Some people need more long-term care than others. That could mean they need assistance 24 hours a day, as opposed to 6 hours during the day. Or they could need to be in a facility, as opposed to receiving care at home. It depends on your health, which of course, we aren’t able to predict or guarantee what will happen.
The whole point behind long-term care, however, is to help you live as independently and safely as possible as you age. While family members may be willing to provide long-term care, others can get long-term care at facilities such as an adult care center, an assisted living home, or a nursing home.
You have four general options for paying for long term care:
1. You can purchase a Long Term Insurance policy and have an insurance company cover the costs (up to limits set by your policy).
2. You can “self-insure” and pay the costs yourself, out of pocket, using the assets that you’ve accumulated for the last few decades
3. If you don’t have much in the way of assets, then Medicaid (a federal and state-run program) will cover your costs.
4. You can guilt your children, grandchildren, and other family members to take care of you 🙂
Specific Examples of how Long Term Care can help patients under a variety of circumstances
- Patients with specific medical conditions need 24 hours medical attention and/or supervision to protect their health and well-being.
- Patients who have had traumatic and/or disabling medical occurrences, such as a stroke, heart attack, or cardiac surgery, and are healing.
- Patients suffering from burns, such as hip fractures.
- Patients who have had knee replacement surgery or other orthopedic operations are healing.
- Patients with mobility issues, whether they be acute or long-term.
- Patients that have trouble performing basic household duties, such as grocery buying, meal planning, basic cleaning and upkeep, and/or keeping up with bills.
- Patients with temporary or lifelong physical impairments that hinder their capacity to perform basic activities of daily life, such as washing, dressing, or toileting.
- Patients that need assistance in properly managing prescriptions or may have trouble keeping track of or going to medical appointments.
- Patients with Alzheimer’s disease, schizophrenia, or other memory problems that impact their welfare and/or quality of life.
Long-term care can benefit any patient who is unable to work properly and independently at home – whether it is temporary in which the patient requires assistance for a few weeks before regaining their independence or a lifelong situation in which the patient requires continuing assistance. If you’re still unsure whether you or a loved one will benefit from this sort of treatment, talk to your doctor for a needs assessment.
The Cost of Long-term Care Premiums
According to American Association for long-term care insurance, the average annual premium for a healthy couple both 55 years old in 2020 can be as little as $3,000 up to $6,300.
As you can imagine, the longer you wait to purchase the policy, the higher the costs will be. But of course, the odds that you will need the policy in your 50s is pretty slim, although it does happen.
The Cost of Long-term Care Expenses
Long-term care at home is still expensive. Home health care facilities delivered by qualified providers averages $4,576 per month. However, if you need less than a full time at home health aide, the national average hourly cost is $24 per hour. So if you need less support, you could pay less than these monthly averages I’ve listed here.
The average monthly cost of an assisted living facility (which is a lower level of services than a nursing home) is $4,300 per month, or $51,600 per year.
The average monthly cost of a nursing home with a private room (which is the highest level of care) is $8,821 per month, or $105,852 per year. Note that this is the average, and if you are in an expensive part of the country, it will likely be higher!
One great resource to find long term care costs in your neighborhood is Genworth’s long term care calculator .
What To Look For In A Policy
Long-term care (LTC) insurance is offered in a variety of forms today. When seeking long-term care insurance for your partner and yourself, remember the following conditions.
Figure out whether your LTC Insurance:
- What is your daily maximum coverage? A number I see a lot is $150 or $200/day
- What is the maximum lifetime benefit amount?
- What is the maximum lifetime policy length? Does it only cover you for certain periods of time, regardless of how much dollar value of the benefit you’ve used?
- Does it cover you for home health care, assisted living, and nursing homes?
There are more questions to ask, and if you want to pursue a policy and see if it makes sense for you in more detail, first, I do recommend that you listen to the rest of this podcast series on long term care!
Shameless plug aside, I also highly recommend that you work with an insurance specialist to go into more depth and see if one of these policies is right for you.
If you’d like to learn more about long term care, and everything you need to be doing before you retire, you can pick up a free copy of my book 65 Questions To Ask And Answer Before You Retire. It’s available at FreeRetirementBooks.com.
REFERENCES
- https://www.webmd.com/health-insurance/features/understanding-long-term-care
- https://www.investopedia.com/terms/l/ltcinsurance.asp
- https://www.genworth.com/aging-and-you/finances/what-is-long-term-care.html
- https://blog.rehabselect.net/what-is-long-term-care-9-types-of-patients-it-helps
- https://www.genworth.com/aging-and-you/finances/cost-of-care.html