Long-term care is an ugly subject to discuss. Nobody wants to think about these types of situations playing out, but it's definitely something you need to talk about with your family.
Before you can do that, though, you need the facts. What is long-term care, what does it cover, and many other questions are answered below.
What is Long-Term Care (LTC)?
LTC is a variety of services designed to assist people with activities of daily living (ADL). These include bathing, eating, getting dressed, and going to the bathroom. Other services might include cooking, cleaning, managing money, using the telephone, caring for a pet, and others. (Source)
What are the chances you'll need LTC?
Over the next 20 years, about 10,000 baby boomers will retire every day. About 52% of people turning 65 will need LTC at some point in their lives. With both of these figures, we can assume that over the next 20 years, almost 40 million retirees will need LTC.
You can find a startling list of LTC statistics using the link, here.
What is the average cost of a nursing home?
The average cost of a semi-private room in a nursing home is $225 per day or over $80,000 per year, and the average nursing home stay is over two years in duration. (Source)
What is the average cost of an assisted living facility?
The average cost of an assisted living facility is about $40,000 per year. (Source)
Does Medicare help with LTC?
Medicare does offer some coverage in a long-term care facility, such as skilled nursing care or home health care, but does not cover long-term care. (Source)
Does Medicaid help with LTC?
If you qualify, Medicaid will help you with long-term care coverage. (Source)
What are the advantages of LTC?
LTC insurance allows you to maintain your independence, you can choose the quality of care you receive, and it reduces the financial and psychological burden that comes with events.
What are the disadvantages of LTC?
The disadvantages are the premiums. They are expensive. The average monthly LTC premium is over $400 per month. (This figure was obtained in Genworth's LTC Calculator for a 65-year-old male, Wisconsin resident, $250 per day benefit and a 4-year multiplier).
You need a plan
Regardless if you get LTC insurance or not, you need to plan. Figure out how you will pay for the care of a situation arises. Part of that plan is making sure the facility can't get your assets if you are unable to pay for care. In this instance, setting up a trust may be a good idea, but please discuss specifics with your attorney.
If you decide to buy LTC or are thinking about it, purchase coverage as soon as you can. As you age, the premium will increase. Also as you age, the likelihood of you getting injured or sick goes up. If you do become ill, it may disqualify you from coverage.
Long-term care is now a fun subject to discuss, however, it is a very necessary conversation to have. Odds are, you will need some type of LTC coverage in the future.
*Please, discuss with your insurance agent, your financial advisor, your attorney, and your loved ones to find out if this is something you want to do. Only then can you decide if you should get it.