How To Plan for Long-Term Care Needs

About 70 percent of people over age 65 will require some type of long-term care services during their lifetime. More than 40 percent will need care in a nursing home. Planning ahead for the care needs of yourself or a family member can reduce stress and ensure funds are available when needed.

You need long-term care when you are not able to complete personal care or other daily activities on your own. Things that increase your risk or make it more likely that you’ll need long-term care include:

• Age: The older you get, the more likely it is that you’ll need help.
• Living alone: If you live alone, you’re more likely to need paid care than if you’re married or living with a partner.
• Gender: Women are more likely to need long-term care than men, primarily because women tend to live longer.
• Lifestyle: Poor diet and exercise habits increase the chance that you’ll need long-term care.
• Personal history: Health and family history can increase the chances you’ll need long-term care.

How Much Care Will You Need?

Service and support needs vary from person to person and often change over time.

• On average, someone who is 65 today will need some type of long-term care services and supports for three years.
• Women need care longer (on average 3.7 years) than men (on average 2.2 years), mostly because women usually live longer.
• While about one-third of today’s 65-year-olds may never need long-term care services and supports, 20 percent will need care for longer than five years.

Individuals who need long-term care services and supports can obtain assistance from one or more of the following:

• Assistance with personal care or other activities from an unpaid caregiver who may be a family member or friend
• Services in your home from a nurse, home health or home care aide, therapist, or homemaker
• Services in the community, such as adult day services
• Care in any of a variety of long-term care facilities.

Who Pays for Long-Term Care?

Surveys reveal that many Americans mistakenly think that Medicare or their medical insurance will cover long-term care services. However, Medicare and other health insurance plans typically cover long-term care only after a covered hospitalization, and only for a limited time.

If you have fairly low income and savings, you may qualify for Medicaid, the federal public program that pays for most long-term care services. Other federal public programs, such as the Older Americans Act, and state-funded programs, pay for long-term care services, but, like Medicaid, these programs cover services for people with high levels of disability and low income and savings. If you have enough income and savings, you will likely need to pay for long-term care services on your own, from your income, savings, and possibly from the equity in your home. You can also purchase long-term care insurance to cover your personal care needs.

Even if you only need a little assistance at home with personal care, paying for it can be difficult. For example, in 2010, the cost of a home health aide coming to assist three times per week averaged more than $19,000 on an annual basis. Those who needed more care services paid an average of:

• $205 per day or $6,235 per month for a semi-private room in a nursing home
• $229 per day or $6,965 per month for a private room in a nursing home
• $3,293 per month for care in an assisted living facility (for a one-bedroom unit)
• $67 per day for services in an adult day health care center.

Private long-term care financing options include:

• Long-term care insurance
• Trusts
• Annuities
• Reverse mortgages.

Which option is best for you depends on your age, your health status, your risk of needing long-term care services, and your personal financial situation. Some methods of paying for long-term care services require that you undergo health screening, and that you be in relatively good health. This typically means that you do not currently need long-term care services and do not currently have a debilitating chronic condition, such as Parkinson’s disease, that would almost certainly mean you would need long-term care eventually. In contrast, some options are only available to you if you are in poor health.

The table below shows which payment options to consider given your current health status.

An Insurance 411 agent can help you review your financial situation and determine what financing method(s) would be best for your needs. For more information, please contact us.