Long term care refers to the support and services that a person might need to live their daily lives, beyond what they can provide for themselves. The specific services provided can vary depending on the individual’s needs and the setting. Some common examples include:
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Personal care: Assistance with bathing, dressing, grooming, and toileting.
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Mobility assistance: Help with walking, transferring, and using assistive devices.
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Medication management: Assistance with taking medications and monitoring vital signs.
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Meal preparation: Assistance with preparing and eating meals.
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Transportation: Help with getting to and from appointments and activities.
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Social activities: Opportunities for socialization and recreation.
Some of us just need some extra help doing the things that everyone else takes for granted. In fact, eventually most of us will.7 out of 10 people will need some form of long term care at some point in their life. With that high of a percentage, you would think most people would also be planning and preparing for this eventuality, right?
In actuality, most people aren’t even close to prepared for the costs of long term care. Even though the Federal Reserve estimates that the average retiree has $426,000 saved at age 65 and older, that just can’t cover the rising costs of long term care.
Following the pandemic, inflation combined with a shortage of skilled workers created an average annual cost of $64,200 for assisted living facilities and $75,500 for in-home care. Multiply that by 20-30 years, and you’re facing a price well over a million dollars. But, what if you didn’t have 40+ years to add to a retirement savings account?
Who Is Eligible For Long Term Care?
We tend to think of long term care as being synonymous with elderly care, but that’s not entirely accurate. Care for the elderly is just one of the groups who might benefit from daily assistance. Anyone who needs help performing daily tasks needs long term care, whether they’re a child with Level 3 Autism Spectrum Disorder, a middle-aged person with a rare blood clotting disorder that caused a debilitating stroke, or someone aging with grace.
In fact, about half of the more than 8 million people who qualify for long term care services are under age 65. So, who needs this kind of support?
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Older adults: As people age, they are more likely to experience chronic conditions such as Alzheimer’s disease, dementia, or physical disabilities.
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Individuals with disabilities: People born with or who acquire disabilities may need ongoing support to live independently.
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Individuals with chronic illnesses: Conditions like Parkinson’s disease, multiple sclerosis, or stroke can require long term care.
Where Does Long Term Care Happen?
Long term care can be provided in a person’s home or in a variety of facilities. While many people may want to try living as independently as possible, it might not always be in their best interest.
That’s why there are various types of facilities to meet the specific needs of an individual. Whether your needs require a lot of medical intervention, more social time, or just extra help accomplishing the activities of daily life, the trained professionals in these organizations are available to help.
But, what if you really want to maintain your independence or age with grace? Then you can age in place with the assistance of home health aide or another type of in-home care. Just like in the facilities, you get access to professional help from caregivers who are trained to make daily life easier and safer for you.
No matter what your preferred living situation, there are options available.
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Home: Services like home health aide, homemaking, and personal care assistance can help individuals maintain their independence and live comfortably in their own homes.
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Assisted living facilities: These facilities offer a supportive environment with services like meals, medication management, and assistance with activities of daily living.
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Nursing homes: These facilities provide a higher level of care for individuals who require significant medical attention and assistance.
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Adult day care centers: These centers provide daytime care for individuals who need supervision and support but can still live independently.
Long Term Care Insurance: A Financial Safety Net
Long term care insurance (LTCI) is a type of insurance policy designed to help cover the costs of long term care services. It can provide financial assistance for a variety of services, including nursing home care, home health care, assisted living, and adult day care.
49% of men and 64% of women who make it to age 65 will need significant long term care, but most people are not prepared to financially cover the costs of long term care. Usually, the financial responsibility ends up falling on their family. But, there is another option: finding the right coverage for your needs before you actually need them.
Benefits of Long Term Care Insurance
Along with receiving the benefits of the care itself, LTCI helps to protect you and your family from the financial hardships that come with requiring care on any level. Consider that normal out of pocket costs for even just one year for a private room in a nursing home can cost well over $100,000, and most family members are not available or equipped to meet the needs of someone that requires long term care.
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Financial protection: LTCI can help protect your assets from being depleted by long term care expenses.
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Peace of mind: Knowing you have insurance in place can provide peace of mind for you and your family.
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Flexibility: Many LTCI policies offer a variety of options, allowing you to choose the type and level of coverage that best suits your needs.
Factors to Consider When Purchasing LTCI
When deciding what type of insurance to get for yourself or a loved one, try to keep in mind:
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Benefit amount: Determine the amount of coverage you need based on your expected long term care costs.
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Elimination period: This is the waiting period before benefits begin. A longer elimination period generally results in lower premiums.
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Benefit period: Choose a benefit period that aligns with your anticipated need for long term care.
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Inflation protection: Consider an inflation rider to help offset rising long term care costs over time.
What Types of LTCI Are There?
There is a wide variety of long term care insurance policies and coverage types to help you meet whatever your needs may be. It’s important to seek out the best policy for your individual situation, since not all types of insurance might cover the help you are actually relying on. There are two main policy types to consider, with many options to review for specific coverage.
A traditional policy acts the same as a home or auto insurance policy, where you pay your premium and make claims for the services you need. While the familiarity of this type of policy might be appealing, it does open up the possibility of premiums rising over time, and you losing your coverage if you ever have to stop paying your premium.
A Hybrid or Linked Benefit policy combines your long term care coverage with another policy, usually Life Insurance. The premium for a hybrid policy is usually on lump sum or it’s broken into a series of fixed payments, removing the possibility of your premium rising. Your benefits are then dispersed into your long term care needs and life insurance payout. Be aware, though, as you use your LTCI benefits, it does reduce what’s available for you life insurance benefits.
Is LTCI Right for You?
The decision to purchase LTCI is a personal one. It’s important to carefully consider your financial situation, health, and family history. Consulting with a qualified insurance agent can help you assess your needs and find the best policy for you.
If you’re still wondering if long term care insurance is worth it, check out our previous post about the benefits of LTCI. By understanding the importance of long term care and the benefits of LTCI, you can make informed decisions to protect yourself and your loved ones from the financial burdens associated with long term care.