Things You May Not Know About Long-term Care

With nearly 10,000 baby boomers turning 65 every day from now until 2030, long-term care is a top concern of current and soon-to-be retirees, or at least it should be.

You never know what sort of health issues life might throw at you, and even if you’re relatively wealthy going into retirement, a series of unfortunate medical problems could turn your finances upside down before you know it.

Over 70% of all Americans eventually need long-term care; however, only 46% predict they may need it. Most Americans also estimate that they might begin needing long-term care at age 79, when the actual average starting age is 73. In this article, we look at more facts and misconceptions about long-term care that might surprise you.

Things You May Not Know About Long-Term Care

Long-term care (LTC) is care needed if you can no longer perform basic everyday tasks called “Activities of Daily Living” (ADLs) by yourself due to a chronic illness, injury, advancing age or cognitive impairment. This type of care is not intended to cure you but is personal care that you might need for the rest of your life. ADL’s include bathing, dressing, eating, toileting, transferring and maintaining continence. Here are some things you may not know about

• Alzheimer’s dementia affects more than 10% of Americans over age 65 and 38% of those over age 85. New cases of Alzheimer’s are projected to increase 35% between now and 2030, and estimated costs for the final five years of end-of-life care for a patient with dementia is $341,651, on average. For those of you wondering, the average age of individuals entering a nursing home is 81. These statistics are among the “75 Must-Know Statistics About Long-Term Care.”
  • Long-term care services and costs vary by state and type of care. Genworth, a provider of long-term care insurance, released its 2017 Cost of Care Survey stating the national average annual cost of a private room in a nursing home is $97,452 which is an increase of 5.5% from one year ago and a five-year annual inflation increase of 3.5%. Interestingly, the biggest increase in long-term care costs was for a home health aide, which increased 6% from 2016 to 2017, to $49,162 per year for 44 hours per week.

                                                                                         Nationwide                         DC Metro Area

Nursing Home (semi-private room)                                 $85,775                                      $118,440

Nursing Home (private room)                                           $97,455                                      $126,840

Source: Genworth 2017 Cost of Care Study

• Medicare does not cover long-term care and offers very limited benefits. Specifically, Medicare will pay benefits for a nursing home stay only if you have been in the hospital for at least three days within the previous 30 days, up to a maximum of 100 days for each stay. Medicare pays for rehabilitation and skilled nursing care only, not for long-term care, which is often called custodial care. Should you qualify for this limited coverage, Medicare pays 100% of the costs for the first 20 days. For the next 80 days, you face a coinsurance payment of $167.50 per day (in 2018). Beyond 100 days of rehabilitation and/or skilled nursing care, Medicare pays nothing. Long-term care costs are simply not covered by Medicare, not one penny, not ever. Nor do private health insurance companies cover any type of long-term care.
• 69% will need long-term care: A key thing to know about long-term care is that there’s a good chance you’ll need it. Currently, 69% of those turning 65 this year will need some kind of long-term care during their lifetime, according to longtermcare.gov.
• How long you’ll need long-term care: Another important thing to understand is that when we need long-term care, the period of time we need it for averages around three years. But this is an average only, with some people needing long-term care for just a few days or a few weeks, and others needing long-term care for 5 to 10 years or more. A 2017 AARP report estimated that about 14% of people will need long-term care for more than five years.
• More than 15% of individuals will spend $250,000 or more on long-term care: This bit of data is likely to make your eyes pop: more than 15% of people who turn (or turned) 65 between 2015 and 2019 will spend more than $250,000 on long-term car`e during their lives, according to a 2016 report from the National Association of Insurance Commissioners (NAIC). So, you should certainly have some kind of plan for how you’ll pay for long-term care in retirement. Ignoring your long-term care needs can be disastrous to your family’s financial security, while properly planning for long-term care can ensure that you preserve your dignity and quality of life to the utmost extent possible
• Stand-alone long-term care companies are struggling, going out of business, or hiking their rates: According to a report by the NAIC, the number of insurers offering stand-alone long-term care policies keeps dropping (down from over 100 to fewer than a dozen still in business) and those remaining in the industry are struggling. The problem? Long-term care costs, for most families, are catastrophically expensive — and these costs have been increasing rapidly. Almost all traditional long-term care insurers have had to drastically raise the premiums they charge their policy holders, or reduce their benefits, or a combination of both. Most companies have have simply stopped offering traditional long-term care insurance policies. Genworth Financial, for example, recently announced a 58% rate hike, while Mass Mutual requested a 77% rate hike. A couple of years ago, the federal government long-term care insurance plan raised its rates by 225% for federal employees and federal retirees. Just in the past year or so, one of the largest long-term care insurance carriers, John Hancock, dropped out of the business of issuing individual long-term care insurance policies. This information shouldn’t necessarily stop you from seeking coverage, but you should consider other options, such as hybrid life insurance/long-term care insurance, which I offer through my insurance agency to clients of our law firm when appropriate.
• Just 35% of Americans have set aside savings for long-term care. People tend to guess wrong when they think about how much long-term care will cost them. They underestimate the costs of nursing home care and assisted living, and are all over the place when you ask them what the costs are for a home health care aid.

Rather than worry about long-term care, why not take steps to plan for it? It’ll give you the peace of mind you deserve, all the while helping to protect your finances in the process.

Planning for long-term care will not eliminate your risk of needing it, but it enables you to sort options and make smarter decisions ahead of time. As a result, you’ll have the peace of mind that no matter what happens, you will know what to do as a family. If you or your loved ones have not done long-term care planning, please call us as soon as possible to make an appointment for a consultation:

Fairfax Elder Law: 703-691-1888

Fredericksburg Elder Law: 540-479-1435

Rockville Elder Law: 301-519-8041

DC Elder Law: 202-587-2797