According to the Department of Health and Human Services, 70% of people turning 65 will need some form of long term care during their lives.
Aging brings a natural decline in health, leading to eyesight or hearing loss, lessened strength and balance, and even disabilities and illnesses. These can all result in you needing costly long term care services, whether at home or in a more professional setting.
What difficulties you face in the future due to aging will be different from everybody else. However, you can take steps, as early as today, to ensure that your future independence, security and dignity will remain intact despite the rigors of old age and its financial toll.
Inside this article are all the essential information you need to educate yourself about long term care and how to start planning for it to secure your future.
Long term care consists of various services that you may need should disability, chronic illness or old age hinder you from carrying out your daily routine and activities. This involves a wide scope of care services, which usually fall under two main types: custodial care and skilled care.
Most long term care services being provided today is more on the custodial side: providing assistance with Activities of Daily Living (ADL) such as bathing, eating, transferring, dressing, and toileting. Likewise, custodial care also provides support for Instrumental Activities of Daily Living (IADL) such as homemaking, taking medicine and managing money. Typically, custodial care can be carried out by loved ones or by paid caregivers.
Meanwhile, skilled care involves therapy, rehabilitation and other similar health services which are usually provided by medical professionals, especially for those who are coping with a chronic condition. However, professional training and certification are usually required before someone can provide this level of care.
Long term care, as its name implies, pertains to the type of care that you’ll need for an extensive period of time. It can be administered within your home or in different care settings such as adult day care centers, assisted living facilities and nursing homes.
Long term care is essential as it allows you to retain your quality of life even if your situation entails otherwise. Given that, it is imperative that you include long term care in your planning for the years ahead.
You may or may not require long term care. It depends on a lot of factors. However, long term care is a current pressing concern for most Americans. Let’s look at the figures.
7 out of 10 individuals who are 65 years old and above will require long term care, as per the U.S. Department of Health and Human Services. This goes to show that the majority will likely need care once they approach their elderly years. In 2020, it is estimated that 12 million seniors will be receiving long term care.
However, long term care is not just an issue for the elderly. In fact, those in the younger age groups have a considerable probability of needing it too. The U.S. Department of Health and Human Services found that 40% of those between the ages of 18 and 64 will likely need care. Likewise, 37% of those needing assistance in performing Activities of Daily Living (ADL) and Instrumental Activities of Daily Living (IADL) belong in the younger age bracket of under 65 years old.
Women, meanwhile have a higher probability of needing long term care due to their longer life span. Females are likely to live 5 years longer than the males. Given this, they will likely live alone for the remainder of their elder years and will need to rely on paid care.
The figures presented above clearly state that long term care is an issue for everybody. True, there’s a chance of you not needing long term care at all. However, statistics show that there’s a huge possibility that you will. With that, it’s essential that you integrate long term care in your financial and retirement planning.
Long term care costs vary from state to state. Generally, however, they can cost a considerable amount and easily deplete your nest egg should you face this need unprepared. Furthermore, the rates of different care services constantly increase annually. Genworth’s Cost of Care Survey1 showed that all care settings have increased their prices in just the course of one year. Some reflected a less dramatic change while others showed a substantial shift.
Nursing home stay in a private room has showed a very significant hike. From 2012 to 2013 alone, the increase is at 4%. Five years ago, the annual median cost for this care setting is at $67,527; today, it’s $83,950. In that time frame, the price of nursing home stay has climbed by 24%.
Meanwhile, even those who are less likely to stay in a nursing home are not spared from the towering costs of care. Assisted living facilities offer a lower level of care than that of nursing homes, therefore their rates are lower. However, Genworth has found considerable increase in their prices as well. The survey found that staying in an assisted living facility has a current annual median cost of $41,400, which is 4% higher than last year’s rates.
Adult day care centers as well as in-home care rates went only a few notches higher—annual increase is at 2% for the adult day care centers and 1% for home care services. Though their price hikes were not as substantial as the other facilities, remember that their cost can accumulate into one huge expense that can impact your finances considerably.
Long term care costs are towering as it is today. Just imagine how the pricelist will look like in the years to come.
Planning for long term care is essential because of three reasons. First, long term care can come at a hefty cost and can easily damage your finances if you face it unprepared. Second, there’s a high probability that you’ll need care especially if you get to live beyond the age of 65. Lastly, planning allows you to have more control on how you will receive care in the future.
The cost of staying in a nursing home for a year can cost as much as $80,000. Depending on the state, the rate can be even higher than that. Other care facilities and in-home care can also mean spending thousands of dollars. If you don’t have a plan in place, your hard-earned savings can easily crumble if the need for long term care arises.
Statistics show that the majority of Americans has a probability of needing long term care at some point. More so, current estimates show that a person’s risk of needing long term care increases with age. These are just assessments and you may or may not need care. However, it doesn’t hurt to plan. In fact, what will hurt is facing long term care without any course of action in place.
Planning allows you to explore different care options thoroughly and helps you prepare financially. Most people feel the heavy impacts of long term care because they acted only when the need presented itself. This can result to receiving unsuitable care and overspending because everything was done in haste due to inadequate preparation time.
Ideally, planning for long term care should begin early. You should start considering your different long term care options even if you’re still decades away from retirement. Remember that the need for long term care is not solely dependent on age. Accidents can pave way for disabilities that may also need long term care services.
If you’re in great shape, the subject of long term care is probably the last thing on your mind. However, preparing for long term care is best while you’re still healthy and fully capable of making crucial decisions. This enables you to have full control on how you will be administered care in the future. To make your strategy stronger, you can involve your family in your decision-making as this can affect them as well.
Starting early with long term care planning is very beneficial as it provides you a road map on how to be financially prepared for this need. Apart from this, it provides peace of mind. Should long term care needs arise, you need not worry since a course of action is ready for you to follow.
In order for you to come up with a long term care plan, you must need to determine the following:
The first step in planning for long term care is assessing what your future needs are. You can do this by looking into your health. Health is a primary determinant of how much long term care you’ll need, thus, you need to examine your well-being in order to plan thoroughly.
Consult your doctor and ask him for an assessment or forecast of what your health will be like years from now. He will be able to come up with an evaluation based on your current health standing, lifestyle, medical records, and family health background. By examining these, he will be able to determine if you are prone to any medical conditions based on your genes and current way of living. You can base the level of care you’ll prepare for based on what comes out of his assessment.
As you plan, familiarize yourself with the different avenues by which you can receive care. By learning about the different care settings, you will be able to determine which one matches your requirements.
The different care settings are: in-home care, adult day care centers, assisted living facilities, continuing care communities and nursing homes.
These settings vary by the level of care that they provide. More so their rates also differ from state to state. As you plan, consider the cost of care services in your area.
Meanwhile, care can also be provided by a family member. However, before you go this route, make sure that your loved ones can handle the responsibility of being a family caregiver. 70% of workers have difficulties juggling their career and caregiving responsibilities. Meanwhile, 69% had to modify their work schedule, lessen their hours or even take unpaid leaves in order to take care of a loved one.
Clearly, family caregiving can have a huge toll on your family, the worst of which is premature resignation which results to loss of income. To avoid such predicaments, determine how much you can expect from your family in terms of care.
Paying privately, government programs and long term care insurance are the financial means that can support your long term care needs.
What seems to be the easiest way to tackle the financial aspect of long term care is paying privately or self-insurance. This simply means setting aside funds that’s specifically allotted for long term care expenses. However, paying privately has high risks since it can easily be depleted should it fall short of your care expenses.
Medicare and Medicaid are government programs that most people think will sufficiently cover their care expenses. However, Medicare generally doesn’t cover long term care; it can only pay for a limited nursing home stay if a medical situation calls for it. On the other hand, Medicaid can cover long term care; however, your assets need to be close to depletion before you can qualify for its benefits.
Getting covered under long term care insurance is a sure-fire way of having your long term care expenses taken care of. This policy is designed to pay for all levels of care and a variety of care settings. Moreover, its benefits are designed to keep pace with inflation. Of all the payment options, it’s highly encouraged that you protect yourself with this insurance policy as it can be custom-fitted to your needs and financial strength.
It depends—this is a quick answer to this question. Long term care insurance premiums are determined through a number of factors:
How old you are at the time that you acquire your policy has a direct effect on how much you will be charged for long term care insurance. Generally, the younger you are, the lower your premium.
Applying while you’re at your prime will always get you the best rates. You can also be entitled for health discounts that persist even if you developed conditions along the way. Meanwhile, if you have pre-existing conditions, prepare for much higher premiums since the insurer will be taking a higher risk in providing your coverage.
How much coverage you acquire also heavily influences premiums. Coverage means both the amount of benefits the policy will pay out and the length of time you’re covered. You will decide how much of both your policy will have - generally, bigger benefits and longer coverage means higher premiums. Riders can also be added to your policy to provide flexibility and broaden your benefits.
The cost of care varies from state to state, and so does long term care insurance. Where you intend to receive care will also play a role on how much your policy will cost.
Insurance companies set their own prices, so your choice of insurance provider is also a factor that will affect the cost. In fact, rates from different insurers can vary by as much as 60-90% for the same policy.
Long term care insurance is a risk management tool against the implications of long term care. To fully understand its importance, here are the true advantages of having this policy in force:
The primary function of long term care insurance is to pay for care expenses. Since it shoulders the toll of paying for care services, your savings will be left untouched. This ensures that your wealth, assets and estate will remain intact and can be passed on to your heirs or loved ones.
Having a policy in place provides you a wide range of choices when it comes to receiving care. You don’t need to worry if your chosen facility will accept payment from government programs or not. In effect, it allows you to have freely choose how you will be administered care and from whom. It can even be used to compensate for the care that a loved one or family member provides.
The family is typically the first go-to of a person needing care. Though loved ones are usually willing to take on the role of a family caregiver, you need to realize that this can have major implications on their quality of life, such as loss of income. With long term care insurance, your family is spared from the burden of shouldering your care requirements. Thus, you get to retain your independence as you don’t need to rely on people close to you for care.
The sense of security—both financially and emotionally—that long term care insurance provides is incomparable to its cost. Nothing beats having peace of mind in knowing that you and your loved ones can retain the same quality of life amid the challenges posed by long term care.
Long term care insurance is one of the most important purchases you’ll make. Before you hand in your payment, make sure that you have a clear understanding of the following:
Before you transact with an insurance provider, make sure that it’s a reputable one so you can claim your benefits without trouble. You can refer to data from several rating agencies such as A.M. Best and Standard and Poor’s, which rate insurers based on over-all performance and financial strength.
Before you become a policyholder, you need to meet the qualifications set by the insurance company. Know what these are. Typically, requirements are highly related with your health and age.
Make sure you understand every word written on that policy before you sign and settle your first payment. Understand how each clause works from benefit amount and duration, triggers, riders and exclusions on certain things such as pre-existing conditions. Your agent can explain these things to you in a way that you can easily comprehend, but make sure that you have read the policy yourself.
See if non-forfeiture benefits are offered. This feature provides assurance that should the policyholder drop his coverage, a portion of the money he paid in premiums will be returned to him.
See if there’s a provision in your policy that waives you of your payment responsibility should you get disabled. If there is, determine what the conditions are before the waiver takes effect. If this option is not included, ask how you can incorporate it in your plan as an insurance rider.
Planning for long term care can be an arduous process. The good news is you don’t have to go through it alone. As you integrate long term care in your future planning, you can seek the advice and assistance of the following people:
A financial adviser can aid you in carrying out the goals that you want your finances to attain, and that includes funding for long term care. They are equipped with the right training to help you manage financial matters such as properties, investments and even insurance.
An elder care attorney’s primary role is to provide legal assistance to the older population. Some of what they tackle are concerns regarding social security, Medicare, retirement, abuse and long term care. Apart from providing legal counsel, they can also help in creating a plan that’s in-lined with the law.
An insurance agent specializing in long term care insurance policies can be your best ally. They can make good recommendations on everything, from your choice of insurance carrier, to coverage, and to your insurance riders. However, keep in mind that some make it their goal to just sell. Make sure that they’re credible, trustworthy and really keen on helping their clients.
Nothing beats advice that’s based on real experience. As you plan for long term care, take time to consult the people close to you regarding this matter, especially those who have undergone this process. They’re not necessarily long term care experts, but what they went through can provide you substantial insight on planning for long term care, getting a policy, and preparing for the future.
After reading this article, you have hopefully realized the importance of planning for long term care and acquired enough information to begin right away.
For more information, please visit www.ltcoptions.com to read more in-depth articles on the topics presented here. You can also find the median costs of care in your state to gauge how much you can be looking to spend in the future.
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LTCOptions aims to provide you with sufficient information regarding every aspect of long-term care—from the basic down to its more complex areas. We are also more than willing and able to help you find the best long-term care insurance policy suited for your retirement or financial plan.