As people live longer lives, it is becoming increasingly necessary to consider the need for long-term care as we age. While not something the average person wants to consider, long-term care costs make planning ahead for this particular eventuality essential. The thing to remember is that long-term care is not precisely end-of-life care. It is care that may be required for many months or even many years. The more you know about long-term care, what it is, and what it means financially for you and your family, the better you can prepare for what may lie ahead. Here's what you need to know to pursue effective long-term care planning for your needs.
Understanding Long-Term Care
Long-term care is a type of care that will last several months or even years for people who can no longer provide certain levels of care for themselves. It typically includes some forms of personal care and medical care. Many conditions require long-term care, with conditions like Alzheimer's and dementia topping the list. Other conditions that require long-term care include the following:
- Osteoarthritis
- Strokes and stroke recovery
- Parkinson's disease
- Cancer
- Diabetes
- Major lung diseases
- Traumatic brain injury
Even some injuries from falls and auto accidents can lead to the need for long-term care. It isn't necessarily an age-related issue and is something that people of all ages may need to consider as part of a long-term financial planning strategy.
Costs of Long-Term Care
The costs of long-term care can be staggering for those who have no plan in place to cover these costs. The median cost (nationwide) for assisted living is $4,500 per month – approximately $54,000 per year. For nursing home care, that rate goes up to more than $9,000 per month or nearly $95,000 yearly. Some families believe they can save money by hiring a home healthcare provider for their loved ones. The only problem is that it can quickly run up to a price tag of $60,000 per year for only 44 hours per week of care. If someone needs 24-hour care, those costs increase exponentially. The bottom line is that the costs of this essential care are overwhelming to families – many families barely earn enough to cover the total costs of long-term care for a single year without paying for anything else.
Planning for Long-Term Care
One effective way to plan for long-term care is by purchasing insurance coverage. This approach allows families to opt for varying care levels, offering financial reassurance. While buying insurance doesn't ensure you'll need such protection or a specific living arrangement, it does mean that if the need arises, your insurance can help cover the costs associated with the care your health demands.
Insurance Options for Long-Term Care
The truth is that the costs of long-term care are rising rapidly. New medical interventions and increasing expectations for long-term care facility services mean that insurance providers are hard-pressed to keep up with rising rates. It means increasing premiums and fewer bells and whistles included within the policies. However, many insurance companies are beginning to offer hybrid policies and letting customers know that coverage costs will likely increase. In contrast, the benefits may decrease to address rising care costs over time.
Medicare and Long-Term Care
Medicare does not cover long-term care in a nursing home or assisted living facility. However, Medicare will cover the costs of skilled nursing or home health aides if they are medically necessary.
Self-Funding Long-Term Care
Many families believe self-funding is the way to go regarding long-term care. The problem is that it is impossible to guess how long someone will need long-term care. It could be a few months or many years, depending on the condition and overall health of the individual. For instance, an otherwise healthy patient with dementia could live 15 to 20 years.
Legal Considerations in Long-Term Care
The problem with long-term care is that every case is unique and different. No one rule works in every situation and for every patient. Some people are of sound mind when entering long-term care contracts, while others, particularly those with varying degrees of dementia and Alzheimer's, are not. In these situations, it is up to the families to advocate for appropriate care and treatment of their loved ones and ensure that funds are available to cover the costs, which is why appropriate insurance is so important.
Takeaways
No one wants to consider the possibility of long-term care in the future. Unfortunately, it is something you must consider and have a financial plan to manage.