It interests me that many of our clients who have purchased long-term care (LTC) insurance have had the experience of providing care for a loved one. Clearly, shouldering the commitment necessary to provide LTC underscores the value of LTC insurance.
The Genworth 2014 Cost of Care Survey provides some compelling statistics on how providing LTC impacts the caregiver. Sixty-five percent of caregivers reported missing work and one-third said they had less time to dedicate to their careers. Forty-five percent acknowledged that providing care impacted their personal health and well-being, while 34 percent said their care-giving duties put a strain on their families. More than half (58 percent) said they cut their own discretionary spending in order to fund some LTC expenses.
Assisting a loved one with the activities of daily living also tends to mitigate what is traditionally the chief objection to purchasing LTC insurance—that after paying all the premiums, the benefits remain untapped. In fact, seven of ten older Americans will require LTC. Yet, most of us push that statistic aside, believing we will be in the lucky minority that never requires assistance with the activities of daily living. However, failing to consider and plan for these potential healthcare costs can put your retirement, and your loved ones’ lifestyles, at risk.
As you age, whether you plan to purchase LTC coverage or self-insure, it’s important to stay up-to-date on the costs for LTC. The Genworth 2014 Cost of Care Survey reports the following averages:
- Homemaker Services—“Hands-off” care such as cooking, cleaning, or running errands; $19 an hour.
- Home Health Aide Services—“Hands-on” personal care, but not medical care; $20 an hour.
- Adult Day Health Care—Centers that offer much-needed breaks for caregivers with services that include socialization, supervision, and structured activities designed to meet individual needs. Some programs also provide personal care, transportation, medication management, social services, meals, personal assistance, and therapeutic activities; $65 a day.
- Assisted Living Facility (ALF)—Living arrangements that provide personal care and health services for people who may need assistance with activities of daily living, but wish to live independently. The level of care provided is not as extensive as nursing home care. Assisted living is not an alternative to a nursing home, but an intermediate level of LTC; $3,500 a month.
- Nursing Home Care—These facilities provide a higher level of supervision and care than an ALF, including personal care assistance, room and board, supervision, medication, therapies and rehabilitation, and skilled nursing care 24 hours a day; semi-private room for $212 a day or a private room for $240 a day.
Of course, these are national averages. To find out how much LTC could cost you, use Genworth’s interactive map. It allows you to compare current LTC costs across the United States and to calculate projected costs. You can also download Genworth’s Cost of Care app from iTunes,which allows you to view LTC costs on a daily, monthly, or annual basis for 440 regions throughout the United States. You can compare care costs in different care settings, including in-home care, adult day health care, assisted living facility, and nursing home care, and you can estimate costs up to 30 years in the future. You can even save, print, or share your results. That could be a great way to get the LTC conversation started with your spouse or loved ones.
There are plenty of options to discuss, and the LTC marketplace changes frequently. For instance, “hybrid policies” address consumers’ worries about purchasing coverage they will never use by providing a dollar amount of LTC coverage that converts into a life insurance benefit if you never tap the LTC policy. Responding to the strong preferences of the Boomer generation, it is now possible to purchase LTC insurance that allows you to specify where you wish to receive care. And, according to the Genworth report, LTC is increasingly being delivered in homes across the nation. Notably, while the cost of care among all LTC providers has steadily increased, the cost of facility-based care has grown at a much greater rate than home-based care.
Buying a LTC insurance policy in your 50s generally means a lower premium. Also, keep in mind that you don’t have to buy a Cadillac LTC policy right away. If the first LTC quote seems unmanageable, trim back the coverage until you arrive at a premium you can afford. Of course, not everyone needs LTC insurance. Depending on your wealth, you could plan to self-insure. However, that demands disciplined saving.
My bottom line for the LTC issue is the same as it is for any financial goal: If you don’t think about your future and plan in advance, you limit your choices. And when it comes to your long-term health, you might also create a burden for your family by ignoring the issue of LTC.