Football has kicked off, and fall is finally here. Kids are back in school, and it’s time for the adults to learn our ABC’s on a topic that we typically don’t like to discuss – aging and declining health.
Unfortunately, both are inevitable, and at some point in your life there is a good chance that you will have a health crisis. These can be unexpected and costly and could possibly eliminate assets that one might need later on in life. One possible solution to help counter the financial burden is purchasing Long-Term Care. I have had over five client meetings this month where the main question asked was how to support health needs and control expenses, without depleting their nest egg.
Since this has been such a frequent concern recently, I thought that I would address some of the very basics of Long-Term Care Insurance.
A: Activities of Daily Living
Long-term Care (LTC) is a variety of services which help meet both the medical and non-medical needs of people with a chronic illness or disability who cannot care for themselves for long periods. Most long-term care is usually not medical care, but rather assistance with the basic personal tasks of everyday life, sometimes called Activities of Daily Living. Activities of Daily living (ADL’s) that may become impaired due to a medical event or the natural progression of aging are often the root cause for custodial care. Some examples of ADL’s are transferring, eating, dressing, and bathing.
B: Both Home and Facility
Often, when someone hears the term “LTC” they immediately think about a Nursing Home. Obviously, that is not a very pleasant thought. In fact, many people (43%) receiving long-term care services are not living in a Nursing Home; they are usually receiving care in their own home. Polices often offer a choice as to where your care will take place. Most of the time, we suggest a comprehensive policy that allows our clients the choice of a care facility or their home. [1]
C: Cost
One downside to the great advances in medicine and technology is that we live longer, and it costs more! Today’s national average cost of care for a semi-private room in a Nursing Home is nearly $85,000 per year (Genworth Cost of Care Survey, April 2018). If we assume a conservative inflationary growth rate of 5%, then in roughly 15 years, the national average cost of care could be close to $160,000 per year, and in 30 years, that figure will have risen to approximately $340,000 per year! Per a recent Morningstar 2018 article, $225 billion was spent on Long-term care in the US in 2015.
Stats:
· Statistics have shown that 97% of Americans today will require some long-term care assistance by the time they are 85 (The LTC Report).
· Studies have shown that 70% of people age 65 and older will need some form of long-term care in the next few years.[2]
· Long-term care is not just a concern for the elderly. Per the Federal Long-Term Care Insurance Program, nearly 41% of long-term care recipients are people under the age of 65!
By obtaining long-term protection, you are not only giving yourself peace of mind and security, but also giving your family a gift- you have relieved them of an emotional, financial, mental and physical responsibility and burden for years to come.
Written by:
Arthur Strauss, CFP®
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Investment advice offered through Strauss Financial Group, Inc., a Registered Investment Advisor.
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[2] US Department of Health and Human Services