The takeaway: Plenty of people make their grand exit having never needed long-term care or long-term care insurance. The quiz below lets you know if you share the same characteristics with those who’ve typically needed long-term care in their sunset years. If you’re unprepared, the cost of long-term care can be catastrophic for your family. (But so can the insurance premiums.) Check out the quiz, and the research behind it, before you spend the big bucks. You got this, Boomer.
Greetings, Boomer! Rumor has it that 70% of us will need long-term care. That rumor, bandied about in official-looking reports, never seems to be accompanied by the original evidence-based study describing how that result was obtained.
You can breathe (a little) easy.
But for the unlucky ones who do, they’ll need to pony up $100,000 annually (in today’s dollars) if they require a nursing home. For those unlucky men who’ll need long-term, they’ll need it for 1½ years, on average. Those unlucky women will need it for 2½ years, on average.
If we’re unlucky and unprepared, these costs could be catastrophic–not just for us, but for our spouses and children.
Should we try to avoid catastrophe and buy the insurance? Or should we self-insure? Look at the table below and decide which column best describes you.
Long-Term Care Insurance: To Buy or Not to Buy–That’s the Question!
What the self-assessment suggests.
Boomer, figuring out where you fall is a two step process:
- Looking at whether you have more checks in the left or right column and
- Whether one or two items trump all others in importance, and thereby determine your decision.
Step 1. Look at which column has more checks.
If more checks were for items in the left-hand column, you may not need insurance for the reasons below.
- You have characteristics that research shows may help you avoid long-term care; (Items 1-4).
- You either have enough money to self-insure or, conversely, you don’t have enough to buy the insurance. In the latter case, Uncle Sam may eventually pay for your care; (Items 5-9).
- You’d rather self-insure than pay thousands for expensive insurance you might not use; (Item 10).
- You have a lifestyle that research shows could stave off the need for long-term care or reduce the amount of time you’d need it. (Item 11).
Had more checks on the right side?
Then the opposite applies.
Step 2. Look at which items are the most important to you. Chances are there are one or two items on the assessment that trump all other items. For one woman, more of her answers were in the right column, suggesting she should buy the insurance. She didn’t care. She had the money to self-insure indefinitely. That’s what she was going to do. She simply refused to pay a lot of money for insurance she might never use.
In contrast, a friend of mine had more checks in the left column, which suggested she didn’t need the insurance. Nonetheless she’s buying. Why? Because she has a special needs child. Maximizing that child’s inheritance trumps all other considerations. She wants to avoid even the potential of catastrophic long-term care costs eroding that child’s inheritance.
These are two extremes. Where do you fall on this continuum, Boomer?
Still not sure? Here’s research to consider before you risk the big bucks.
Items 1-3 – Demographics & Heredity. Research shows that you’re more likely to need long-term care if you’re a woman, not in a long-term committed relationship,or have a parent who had Alzheimer’s, dementia, or stroke. All three medical conditions have a heredity component.
Item 4 – LGBTQ+. Some researchers have found that lesbians and gay men face greater risks of needing long-term care than their heterosexual counterparts. These results were partially attributed to the health consequences of obesity for older lesbians and bisexual women. For older gay men, results referenced
Item 5 – Medicaid. As of this writing, Medicaid will pay your long-term care expenses if you generally have less than $3,000 in income–$2,250 if you’re single–and less than $125,000 in assets. (States differ slightly on these amounts. Check with your state’s Medicaid office.)
If your assets and income exceed these amounts, we’ll discuss how to find sheltering strategies that can help protect your assets against the ravages of nursing home costs later in this series.
Item 6 – Self-Insure. If you can earmark $500,000 for long-term care invested at a minimum of 5%, you may want to consider self-insuring. Make sure you have plenty of additional assets to fund the rest of your life’s retirement expenses. I’ll explain this analysis in an upcoming column. For now, consider that you might not need long-term care coverage.
Items 7-9 – Insurance affordability. No need to buy if you can’t afford the premiums or the unpredictability of a traditional policy or the high cost of a hybrid policy (discussed later in this series). The advantages and disadvantages of a traditional vs. hybrid policy are discussed in a future column.
Item 10 – Inheritance. Should you self-insure and later need long-term care, you’ll reduce the inheritance you leave your kids. If this bothers you tremendously, you might want to cautiously consider buying long-term care insurance. Some types of coverage allow you to leave an inheritance to your spouse or kids. These insurance products are discussed in a future column.
Items 11 – Exercise and Dementia.
Research shows that exercise delays the onset of cognitive decline if 1) you routinely engage in at least four different types of physical activity and 2) if you engage in the activity for at least 20 minutes. Specifically, such exercise is inversely related to the onset of cognitive impairment. The authors note that cognitive impairment is a common reason for needing long-term care.
Later in this series: Using the self-assessment to make good decisions.
After taking the self-assessment you may decide to shop for long-term care policies or leave it all to chance. Have a look at the rest of the long-term care series before buying–listed just above the notes section. Get the facts, protect your wallet. Later in this series, we’ll discuss your various insurance options.
For now, cue the horn section…
You got this.
Long-Term Care Series
- Long-Term Care: Three Vital Things You Need to Know
- Long-Term Care Insurance: Five Warnings Before You Buy
- Long-Term Care Insurance Quiz: Will I Need It? Can I Get It?
- 17 Ways to Get Turned Down for Long-Term Care Insurance. (And What Happened to Me.)
- Getting Medicaid to (Maybe) Pay for Your Nursing Home Costs: The Epic Guide!
- Three Types of Long-Term Care Insurance: You Might Not Need Any!
- Continuing Care Retirement Communities Part 1 —Seven Essential Things to Know
- Continuing Care Retirement Communities Part 2 — Four Ways to Figure Out if They’re Worth the Money
- Continuing Care Retirement Communities, Part 3 — What to Ask Before Signing on the Dotted Line.
Favreault, Melissa and Dey, Judith. “Long-Term Services and Supports for Older Americans: Risks and Financing Research Brief.” U.S. Department of Health and Human Services: Office of the Assistant Secretary for Planning and Evaluation. Revised 2016.
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Hiedemann,Bridget and Brodoff, Lisa. “Increased Risks of Needing Long-Term Care Among Older Adults Living With Same-Sex Partners.” U.S. National Library of Medicine National Institute of Health, 2015. 2013 — (Also published in American Journal of Public Health, Vol.103, No. 8, pgs. 27-33, 2013.)
Henning-Smith, Carrie; Gonzales, Gilbert; Shippee, Tetyana P. “Differences by Sexual Orientation in Expectations About Future Long-Term Care Needs Among Adults 40 to 65 Years Old.” U.S. National Library of Medicine National Institute of Health, 2015. — (Also published in American Journal of Public Health, Vol. 105, No. 11, pgs. 2359-2365, 2015.)
Perry, Mo. “The Challenge of Being Transgender in a Nursing Home.” The Atlantic, August 12, 2015.
Jedrziewski, M. Kathryn; Ewband, Douglas C.; Wang, Haidong, Trojanowski, John Q. “Exercise and Cognition: Results from the National Long-Term Care Survey.” U.S. National Library of Medicine National Institute of Health, 2010. — (Also published in Alzheimers & Dementia: The Journal of the Alzheimer’s Association, Vol. 6, No. 6, pgs. 448-455, 2010.)
Cornell, P.Y, Grabowski, D.C, Cohen, M, Shi X, Stevenson, D.G. “Medical Underwriting in Long-Term Care Insurance: Market Conditions Limit Options for Higher-risk Consumers.” U.S. National Library of Medicine National Institute of Health, 2016. — (Also published in Health Affairs, Vol. 35, No. 8, pgs. 1494–1503, 2016.)