Long-term care can be a pretty easy issue to ignore. It’s difficult for most people to imagine themselves in such a helpless position and many think of the issue as something only other people need to worry about. We all know, deep down, that we’ll eventually age and lose the faculties of youth. Dealing with that reality in the present is a different story.
Ignore the possibility of needing long-term care at your own peril. The likelihood that you’ll need long-term care is higher than most people realize. And with average life expectancies predicted to rise over the next few decades, that likelihood is only going to increase. (For more, see: Long-Term Care Insurance: Who Needs It?)
Likelihood of Needing Long-Term Care
Long-term care includes nursing homes, in-home care and assisted living facilities. Patients may require extensive care due to a disability, injury or other malady. Common reasons for a senior needing long-term care include dementia, cancer and injuries that significantly restrict mobility. These places assist seniors with basic, everyday activities such as using the restroom, eating and getting dressed. They can also help manage finances, care for pets and make doctors' appointments.
Because women live an average of five years longer than men, they’re likely to need more time in a long-term care facility. The average stay for a woman in a nursing home is about 1.5 years more than it is for a man, according to the U.S. Department of Health and Human Services. (For more, see: Considerations for Long-Term Care Coverage.)
The odds of anyone needing long-term care is high. About 66% percent of 65 year olds will need it and one-fifth will have to be in a facility for more than five years. Currently, men spend an average of 2.2 years in a long-term care facility, while women spend 3.7 years.
Some people assume that long-term care will be covered by Medicare, but it won’t. Even Medicaid only pays for a third of those costs, while general health insurance covers less than 3%. If seniors anticipate needing long-term care, they need to buy separate insurance to cover it.
Long-term care can cost up to $250 a day at a nursing home or more than $20,000 for a three-month visit. For those who choose to have in-home help, the average cost is $21 per hour. A daily stay at an adult day care center is about $70. For people who don’t have the ability to pay cash for long-term care, insurance is the next best thing. Unfortunately, it can be pricey as well. The average person pays $3,500 in annual premiums for long-term care insurance. That adds up to almost $300 a month, a huge chunk compared to auto and homeowner’s insurance. With price tags like that, it’s easy to see why people ignore the issue so stubbornly. (For more, see: Long-Term Care: More Than Just a Nursing Home.)
Many policies will only pay a portion of the cost, so seniors will still have to pay some out-of-pocket expenses. According to statistics from the National Care Planning Council, seniors paid 25% of nursing homes costs themselves in 2010.
How to Be Prepared
Like any form of insurance, long-term care is not something that anyone wants to actually use - but having it can ease your worries. According to the American Association for Long-Term Care Insurance, 50% of seniors who bought their policy before turning 60 used it during their lifetime. Those are pretty high odds.
Unfortunately, people with certain health conditions may also be ineligible to purchase long-term care insurance. This can include Parkinson's, Alzheimer's, cystic fibrosis and a sizeable list of other conditions. If you’re unable or ineligible to purchase long-term care insurance, make sure to have a well-stocked emergency fund. Even those with insurance should check their policy to see how much they might have to pay out of pocket. (For more, see: Taking the Surprise out of Long-Term Care.)
Purchasing a policy when you’re younger can save you thousands in annual premiums over the course of your lifetime. The difference between someone who purchased a policy at 55 versus age 70 is about $1,500 a year. Not all policies are created equal. Many do not cover stays in facilities that last less than 90 days. About 20% of people spend less than 90 days in nursing homes, meaning their coverage will not kick in. Seniors can purchase policies that will cover visits for any length of time, but they will likely pay a higher premium.
The Bottom Line
Like most potential problems, long-term care is an issue that gets scarier the longer you ignore it. But just like those other problems, that fear starts to abate when you spend some time preparing for the worst. Do everything you can to be prepared. Live a healthy lifestyle, get your healthcare ducks in a row and ensure your retirement years will be spent in comfort. Your future self and your family will thank you for it. (For more, see: Long-Term Care Insurance: You Have Options.)