- What is long-term care?
Long-term care refers to ongoing services and support needed by people who have chronic health conditions or disabilities. There are three levels of long-term care:
- Skilled care: Generally round-the-clock care provided by professional health care providers such as nurses, therapists, or aides under a doctor’s supervision.
- Intermediate care: Also provided by professional health care providers but on a less-frequent basis than skilled care.
- Custodial care: Personal care provided by family caregivers, nurses’ aides, or home health workers who assist with “activities of daily living” such as bathing, eating, and dressing.
Long-term care is not just provided in nursing homes–in fact, the most common type of long-term care is home-based care. Long-term care services may also be provided in a variety of other settings, such as assisted living facilities and adult day care centers.
- Why is it important to plan for long-term care?
No one expects to need long-term care, but it is important to plan for it, nonetheless. Here are two important reasons why:
The odds of needing long-term care are high.
- At some point after reaching age 65, someone has an almost 70% chance of needing long-term care*
- Approximately 8% of people between ages 40 and 50 will have a disability that may require long-term care services*
*LongTermCare.gov, Last modified on February 18, 2020
The cost of long-term care can be expensive.
For many, the cost of long-term care can be expensive, absorbing income and depleting savings. Some of the average costs in the United States for long-term care* include:
- $7,756 per month, or $93,075 per year for a semi-private room in a nursing home
- $8,821 per month, or $105,850 per year for a private room in a nursing home
- $4,300 per month for an assisted living facility
- $1,603 per month for services in an adult day health-care center
*Cost of Care Survey 2020, Genworth Financial, Inc., December 2, 2020
- Does Medicare pay for long-term care?
Many people mistakenly believe Medicare, the federal health insurance program for older Americans, will pay for long-term care. However, Medicare provides only limited coverage for long-term care services such as skilled nursing care or physical therapy. Additionally, Medicare provides some home health care benefits, but it does not cover custodial care—the type of care older individuals most often need.
Medicaid, which is often confused with Medicare, is the joint federal-state program two-thirds of nursing home residents currently rely on to pay some of their long-term care expenses. However, to qualify for Medicaid, you must have limited income and assets. Although Medicaid generally covers nursing home care, it provides only limited coverage for home health care in certain states.
- Can I pay for care out of pocket?
The major advantage to using income, savings, investments, and assets (such as your home) to pay for long-term care is you have the most control over where and how you receive care. Alternatively, because the cost of long-term care is high, you may have trouble affording extended care if you need it.
- Should I buy long-term care insurance?
Like other types of insurance, long-term care insurance protects against a specific financial risk–in this case, the chance long-term care will cost more than you can afford. In exchange for your premium payments, the insurance company promises to cover part of your future long-term care costs. Long-term care insurance can help preserve your assets and guarantee you will have access to a range of care options. However, it can be expensive, so before you purchase a policy, ensure you can afford the premiums both now and in the future.
The cost of a long-term care policy depends primarily on your age (in general, the younger you are when you purchase a policy, the lower your premium will be), but it also depends on the benefits you choose. If you decide to purchase long-term care insurance, here are some of the key features to consider:
- Benefit amount: The daily benefit amount is the maximum your policy will pay for your care each day, and generally ranges from $50 to $350 or more.
- Benefit period: The length of time your policy will pay benefits (e.g., 2 years, 4 years, lifetime).
- Elimination period: The number of days you must pay for your own care before the policy begins paying benefits (e.g., 20 days, 90 days).
- Types of facilities included: Many policies cover care in a variety of settings including your own home, assisted living facilities, adult day care centers, and nursing homes.
- Inflation protection: With inflation protection, your benefit will increase by a certain percentage each year. It is an optional feature available at additional cost but having it will help your coverage keep pace with rising prices.
| Deductions for Long-Term Care Insurance Premiums: 2020 & 2021 | ||
| Age | 2020 Limit | 2021 Limit |
| 40 or under | $430 | $450 |
| 41-50 | $810 | $850 |
| 51-60 | $1,630 | $1,690 |
| 61-70 | $4,350 | $4,520 |
| 70+ | $5,430 | $5,640 |
Understandably, many people put off planning for long-term care. However, it is important to acknowledge health problems may someday result in a loss of independence. An Arvest Wealth Management Client Advisor can help create an actionable plan, customized to your unique circumstances, to help ensure you have appropriate options available if long-term care is needed in the future.
A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the long-term care insurance policy. It should be noted carriers have the discretion to raise their rates and remove their products from the marketplace.
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