What you should know about
long-term care
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What you should know about long-term care
Knowledge is power. Know the facts about long-term care so that
you can make solid decisions about protecting your assets, your loved ones and your
financial security. Consider the LTC questions people ask when determining how to
take the next steps with long-term care expense planning.
What is long-term care?
Who needs long-term care?
What are my risks of needing long-term care?
How much might long-term care cost?
Why should I plan for long-term care?
What is long-term care?
Long-term care is a variety of medical and non-medical assistance for the elderly
or for people who have a disability or chronic illness. While most caregiving services
offer help with normal daily tasks, such as walking, eating and grooming, long-term
care can include pain management, preventing unsafe behavior and providing comfort
and reassurance.
You can receive LTC services at home or in a number of settings, depending upon
your preference, level of independence and ability to pay for the costs of care.
Some of your options include:
Assisted living, which provides help with bathing and dressing,
medication reminders and light housekeeping. It's designed to assist those with
minimal needs to remain as independent as possible.
Home care, which can include companions to assist with housekeeping,
cooking and shopping. This form of caregiving can involve medical care provided
by registered or licensed practical nurses. Home care can be part time or full time,
depending upon your needs.
Nursing home services, for those who need more intensive medical
care, such as wound care, rehabilitation or help with respirators or ventilators.
Nursing home care may be temporary (recovering from surgery or an injury) or permanent
(end-of-life services).
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Who needs long-term care?
When you think about long-term care, you may think elder care. But, that's not necessarily
the case. There are many things in life that could trigger an unexpected need for
LTC services. An accident, injury or illness, such as cancer, could create a need
for long-term care. LTC expense is a financial risk that could impact your savings,
retirement, family and what you want to pass on to the next generation.
In 2008, 40% of those who received long-term care services were between the ages
of 18 and 64. Trends show that people are starting to prepare for long-term care
expenses earlier in life. In 2005, the average age of a person with LTC protection
was 61, which is the lowest age in the past 15 years.1
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What are my risks of needing long-term care?
According to the U.S. Department of Health and Human Services, approximately 9 million
Americans over the age of 65 will have used long-term care services in 2008. This
number is likely to increase to 12 million by 2020.1
What you may want to keep in mind is that 70% of people over the age of 65 will
need
long-term
care services at some point in their lives.2 Statistics show that greater than two
in five, or 40%, will need nursing home care for some length of time.1
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How much might long-term care cost?
To determine how much you will need to pay for long-term care expenses, take into
consideration these factors:
- The average cost of care in your area
- The average length of time you would need long-term care
- Inflation rates for caregiving services
1. National average costs of long-term care services in 20103
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Long-term care service
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Costs
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Homemakers
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$18.61 per hour
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Home health aide
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$20.27 per hour
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Assisted living unit
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$3,369 per month
|
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Nursing home/semiprivate room
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$195 per day
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Nursing home/private room
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$216 per day
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2. Average LTC caregiving duration1
The following statistics reflect the average length of long-term care required by
men, women and those of retirement age.
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Consumer
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Average length of LTC
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A person over age 65
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3 years
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Men
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Approximately 2 years
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Women
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Approximately 4 years
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3. Long-term care inflation rate1
The following figures reflect the five-year annual growth rate.
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A private nursing home room
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3.1%
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A semiprivate nursing home room
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3.9%
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Home care
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2.0%
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Assisted living care
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3.3%
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Estimate the cost of LTC in your area.
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Why should I plan for long-term care?
Long-term care preparation should be part of your overall financial plan. It's important
to understand that LTC costs could erode savings and impact your plans for retirement,
your loved ones and what you want to give to the next generation.
Ask yourself if you could protect retirement assets and income while covering the
costs of care. How would you pay for long-term care? Think about your choices.
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Elective options
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Your choices
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Advantages
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Disadvantages
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Self insuring
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You can buy the type of caregiving you prefer.
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If you need LTC, you could spend down your savings relatively quickly.
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Family assistance
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Relatives take on the responsibility of your LTC management or expense.
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This can cause financial and emotional stress on family members.
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Traditional LTC insurance
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It covers future long-term care expenses.
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No money back guarantee.
Premiums can be expensive, may increase and vary based on benefits and time period.
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Hybrid Long-term care coverage5
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You could have more money to pay for long-term care than the actual premium paid.
Some hybrid LTC policies feature a
one-time
premium and return of premium riders4 (for an additional cost).
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You may have to pay for care up front and then be reimbursed by the insurance company.
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MediGap (Medicare supplemental insurance)
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Medicare beneficiaries can purchase this supplemental protection to cover expenses
not paid for, or only partially covered by, Medicare.
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While benefits are standardized among providers, costs can vary.
Insurers may increase premiums as a result of high claims, costs or inflation.
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Government options
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Your choices
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Advantages
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Disadvantages
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Medicare
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It typically offers coverage or limited coverage only for medically necessary nursing
facilities or home healthcare.
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It does not pay for custodial care or support services for daily living.
You must meet specific requirements to qualify for payment of LTC services.
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Medicaid
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This program can pay for certain nursing home and healthcare services for older
individuals with limited means.
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Eligibility is usually based on your financial resources.
Services and eligibility varies from state to state.
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To help you make the long-term care decision that's right for you, discuss your
financial goals, your needs and the LTC options with your financial advisor.
Learn more about long-term care planning and Lincoln products.
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