Long-Term Care: What to Know
We frequently receive questions about long-term care from clients of all ages, especially from those who have experienced it firsthand with aging parents or other family members. Although many of us will eventually need some form of assistance as we age, there remains a significant gap in many financial plans when it comes to covering the costs of this type of care. Our goal is to ensure that you and your loved ones are well-prepared to navigate this often-complex landscape.
Here’s a few of the most common questions we get:
What is long-term care?
Long-term care encompasses a range of services that support aging individuals and help them meet their personal care needs. Common types of long-term care include:
- Nursing Homes & Assisted Living Facilities – Facilities for adults who are unable to live fully independently, with varying levels of care available.
- Home Care/Personal Care or Home Health Care – Home or personal care includes assistance with personal hygiene, dressing, and feeding. Home health care includes skilled nursing care, speech, physical, or occupational therapy, and home health aide services.
- Adult Day Care – Non-residential facilities that support the health, social, and daily living of adults in a staffed, group setting.
How costly is it?
While these services are crucial, costs have been consistently on the rise.
Currently, the national annual median cost for a private room in a nursing home is more than $100,000 a year, and the annual price of just a home health aide is around $75,000 a year. Inflation in the medical industry compounds this problem with many of the projected increases of various types of care being 5% or more. You can check your specific area and the average cost here: https://www.genworth.com/aging-and-you/finances/cost-of-care
One of the primary factors driving these cost increases is the balance of supply and demand. With the senior population growing in the U.S., coupled with longer life expectancies and the lingering impacts of the COVID-19 pandemic on labor markets, the demand for such services has significantly increased.
- After Major Life Changes: Marriage, divorce, the birth of a child, or the death of a loved one are all occasions that should prompt you to review your beneficiary designations. Failing to do so could lead to unintended consequences, such as an ex-spouse inheriting assets.
- Retirement and Job Changes: When you change jobs or retire, it’s especially important to review your retirement accounts and other benefits. Different employers may have different default designations, and you’ll want to ensure your wishes are honored.
- Periodic Check-Ins: Even if nothing significant has changed, it’s a good idea to review your designations every year. Financial circumstances and relationships evolve, and your beneficiary designations should reflect your current wishes.
Won’t Medicare cover care like this?
It’s important to note that Medicare typically only covers shorter-term services. In order to manage rising costs while protecting assets, seniors and their families have several options:
- Opting for a hybrid life insurance policy or annuity that includes long-term care coverage.
- Adding Living Benefits to a life insurance policy, allowing policyholders to access the death benefit in case of long-term care needs or certain health conditions.
- Qualifying for Medicaid, depending on asset and income criteria.
- Leveraging long-term care insurance, which is coverage for costs associated with long-term care that is not covered by health insurance, Medicare, or Medicaid.
- Utilizing personal savings, pensions, and investments to fund long-term care expenses.
Many families use a combination of these strategies to finance long-term care, but the most suitable approach will depend on your unique circumstances and preferences. Rest assured, we are here to assist you in exploring the best way to fund long-term care.