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 the long-term care series.  *Updated 3/30/22*

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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.  Projected estimates of long-term daily, monthly, and yearly costs are shown 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 – January 2022.

Table showing costs of long-term care ranging from adult day care to nursing homes

*Based on 5 days per week 52 weeks.
**Based on 44 hours per week 52 weeks.
Source:  Cost of Care [Nationwide] Survey, 2022 by Genworth Financial, Inc., January 2022.

As you can see, nursing home care is considerably more expensive than 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 of whether you’ll need long-term care–or not.

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

Weigh the odds!

A 2021 report, produced by the U.S. Department of Health and Human Services, projects that a majority of folks will not need long-term care that lasts for more than a year–if they even need it at all.  

These findings are consistent with a report published by this same office in 2016.

Overall, HHS projects that 77% of men and 68% of women will either never need paid long-term care, or will need it for less than a year. See Table 1.  These numbers comport with an earlier Health and Human Services report published in 2016.

In sharp contrast, insurance companies, outdated U.S. government websites, and others who stand to financially benefit, commonly report that 70% of folks will eventually need long-term care.  Be wise, Grasshopper! The government’s own Health and Human Services research arm shows that the 70% number is fallacious

Table 2.  Overall,  77% of men and 68% of women will either never need long-term care, or will need it for less than one year.

Source: “Long-term Services and Supports for Older Americans:  Risks and Financing, 2020,” HHS Office of the Assistant Secretary for Planning and Evaluation, Office of Behavioral Health, Disability, and Aging Policy, January 2021 

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;
  • 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 before the insurance kicks in.

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, i.e., how long you have to wait before your insurance kicks in;
  • 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.

A $200 a day policy pays $73,000 in annual cost of care (365 x $200).  That’s $20,000 short of the cost of a semi-private nursing home room we saw in  Table 1.  In other words, your policy may not pay the full cost of your care.  

However, you can potentially increase your coverage and potentially avoid cost increases, if you lengthen the elimination period required for the policy to kick in.  Most policies have a 90-day elimination policy, but elimination periods can range from 20-days to 180-days.  The longer the elimination period, the potentially cheaper your policy will be. 

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 and the cost of the insurance. Make sure the waiting period doesn’t last longer than you do.

The danger is to not have an elimination period that lasts longer than you do.  My friend John expired just days before the completion of his 180-day elimination period, when his insurance would have finally kicked in.  During the elimination period, the out of pocket costs for his care created a hardship for his family.    

#4. The choices facing you.  

Your choices are several.  My father-in-law had to self-insure his bride’s nursing home costs–which were cheaper then than they are today.  Her care lasted less than two years.  It was paid for by their personal savings, their individual teachers’ pensions, and their individual Social Security checks.

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 was left over, my father-in-law 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:

All of these are described in scintillating detail in the long-term care series linked above and listed below.  True, the choices are a buzz-kill to contemplate, but such contemplation can save you big money. 

And big money is no buzz-kill. 

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Long-Term Care Series

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