Long-Term Care: Four Vital Things You Need to Know

Retro black and white photo of man talking on phone getting info on the 4 things to know about long-term care.

The Takeaway: Long-term care research, shown below, indicates that if you need such care, you won’t need it long.  But just in case you do, here’s also the latest cost information for getting that care.  Don’t be cowed into buying a product that can potentially be financed with better alternatives–discussed here and throughout this series. 

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My mother-in-law’s descent into dementia was so soft and so gentle we barely noticed.  By the end, the ravages were so virulent, her loving husband of 60 years was forced to concede defeat.  Heartbroken, he placed his bride in a nursing home. 

With each daily visit, he’d reintroduce himself.  He had no long-term care policy for her.

Here are the four relevant facts about long-term care you need to know.  

Black and white photo of a seat belt used by race car drivers as readers are cautioned to buckle up for the rest of the blog post.

Looking into long-term care?  Better buckle up!

Buckle up.

#1.  How much  uninsured long-term care costs. 

Here’s cost information from a 50-state survey, as of December 2020, from a national insurer.  (See cost data for your own state here.  Project estimates of long-term daily, monthly, and yearly costs here.) 

These costs are important because they generally are not covered by your health insurance or by Medicare.  (Shocking, I know.)

Table 1. Median National Cost of Long-term Care Annually – December 2020.

Table showing the yearly and daily costs of different types of long-term care.

*Based on 5 days per week 52 weeks.   **Based on 44 hours per week 52 weeks.  Source:  Nationwide survey commissioned by insurance provider Genworth Financial, Inc., December 2020. 

 

As you can see, nursing home care is twice the price of both home health and assisted living care.  Assisted living care is administered at a residential facility that offers varying levels of memory care, along with help in day-to-day activities like laundry, transportation, taking one’s medication, etc.  In contrast, nursing homes provide custodial care and end of life medical monitoring.

#2 The odds that you’ll need long-term care.

black and white photo of dice who's tops say "yes" or "no"

Weigh the odds, Boomer!

A 2016 report, jointly conducted by the Urban Institute and the U.S. Department of Health and Human Services, projects that a majority of folks are not going to need long-term care that lasts for more than a year–if they even need it at all.  

(These findings were generally supported in a 2019 report, discussed momentarily.) 

Here are the percentage break-downs showing who needs long-term care and how long they need it.  As you can see from the table below,

  • 53% of men, and 43% of women, will not need any long-term care;
  • if long-term care is even needed, on average it won’t be for more than 1.5 years for men and 2.5 years for women.

Table 2.  Although women are more likely than men to need long-term care, neither gender will require care lasting more than an average of 2.5 years.  


Source:  U.S. Department of Health and Human Services, Long-Term Services and Supports for Older Americans, Revised 2016.  

A 2019 report, published by the U.S. Department of Health and Human Services, posted similar results.  Specifically, they reported that:

  • more women than men will need long-term care services;
  • 48% of folks will require paid long-term care services;
  • most paid long-term care is relatively short, lasting less than two years.
  • 70% of folks may develop a condition that qualifies for long-term care prior to death, particularly if they live past 85, and much of that care will be delivered by family or friends.
Man looking at his long-term care bill, shocked at how expensive it is.

This bill can’t possibly be right! It’s too expensive.

#3. The cost of long-term care insurance.

The cost of long-term care insurance depends on your age, your general health, and variations among company policies on:  

  • how much they’ll pay per day for long-term care;
  • how many years of care they’ll cover;
  • whether they’ll include inflation coverage, so that your benefit keeps up with the increasing cost of care; and
  • how long the elimination (or waiting) period lasts.

The elimination period.  

The elimination period is the length of time you have to wait between when you need care and your policy kicks in. The elimination period commonly lasts 90 days, but can be as short as 20 days and as long as 180.  

Beware the trade-offs between long elimination periods and insurance premium costs.  Don’t be John. 

Black and white sketch of business people playing tug of war, representing the tradeoff between low premiums and long elimination waiting periods.

Beware the tradeoff between the waiting period for when the insurance kicks in (aka the “elimination period”) and the cost of the insurance.

The longer the elimination period, the potentially cheaper your policy will be. However, the danger of an elimination period that lasts too long is you end up like my late friend John.  He expired just days before the completion of his 180-day elimination period, when his  insurance would have finally kicked in.

During that waiting period, the out of pocket costs created a hardship for his family.  

Price quote from the National Association of Insurance Commissioners. 

With that in mind, here is a price quote from the National Association of Insurance Commissioners that provides the following coverage:

  • a 20-day elimination period;
  • insurance covering $200-a-day in long-term care expenses;
  • 5% annual compound inflation so that the policy keeps up with the cost of care; and 
  • cost of insurance premiums for care lasting four years, six years, or a lifetime.

Table 3.  Average Annual Premiums for a Long-Term Care Policy that Pays $200 a Day 

 

Table showing long-term care insurance costs for care lasting 4, 6, and a lifetime.

Source: A Shoppers Guide to Long-Term Care Insurance published by the National Association of Insurance Commissioners, 2019, p. 28.

 

From the table, you can see that a policy paying $200 a day may cover home health care and assisted living, but falls $20,000 short of the cost of a semi-private room in a nursing home.  (See Table 1.)  In other words, your policy may not pay the full cost of your care.

#4. Choices:  My father-in-law’s and yours.  

Your choices are several.  My father-in-law had to self-fund his bride’s nursing home costs–which were cheaper than they are today.  Her care lasted less than two years, consistent with the 2019 report (discussed above).  It was paid for by their personal savings, his-and-her teachers’ pensions, and his-and-her Social Security.

Retro black & white photo of man in dressing gown surprised he has long-term care choices.

You mean I have all those long-term care choices and more?!?

With what money there was left over, he sought to prepare for his own long-term care needs by buying into a continuing care retirement community.  Eight years later, his own “long-term” care lasted a mere six weeks before he passed.

And you, Boomer?

You, too, have choices.  But those choices do not include  letting the insurance industry scare you into buying a product that:

The long-term care series outlines your choices in scintillating detail.  True, the choices are a buzz kill to contemplate, but you can save yourself big money if you do. 

And big money is no buzz kill. 

 

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Long-Term Care Series

P.S.  Hey, Boomer!  If you think this post would help someone else, could you pass it along or post it on Facebook?  Thanks!  You rock!

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