What is Long-Term Care (LTC)?
- Personal care or supervision needed by persons of all ages for an extended period of time
- Associated with the effects of aging, but may be needed at any time, due to an accident or illness
- Some conditions that may require long-term care:
- Head injury
- Heart disease
- Stroke
- Multiple sclerosis
- Cancer
- Alzheimer’s disease
- Parkinson’s disease
The Need for Long-Term Care is Growing
- Accidents and illness can occur at any age and may require LTC
- Life expectancy is increasing, and the possible need for LTC increases with age
- 78 million baby boomers begin to turn 65 in 20111
- 69% of those turning 65 will need LTC at some point of their lives:2
- 17% within 1 year or less
- 12% within 1-2 years
- 20% within 2-5 years
- 20% within more than 5 years
Every 71 seconds, someone develops Alzheimer’s disease3
1.American Medical News, American Medical Association [amednews.com], January 5, 2009.
2.Based on projections for people who turned 65 in 2005. Georgetown University Long-Term Care Financing Project.
Long-Term Care Financing: Policy Options for The Future. Judith Feder, Harriett L. Komisar. June 2007.
3.“2008 Alzheimer’s Disease Facts and Figures,” www.alz.org.
The Cost of Long-Term Care Continues to Rise
Current costs (National averages for care)
- Nursing home: $74,460 (private room – $204/day) 1
- Assisted living facility: $35,544 ($97/day) 1
- Home health care: $55,480 ($152/day) 1
Future costs
- The projected annual cost of nursing home care in 30 years is $250,0002
- The projected cost for a 3–5 year care event in 30 years is $750,000–$1,250,0002
1. Based on the John Hancock 2008 Cost of Care Survey, conducted by CareScout, 2008.
2. Projected at the average rate of inflation of 4.1% between 1978 to 2008.
The Value of Long-Term Care Insurance
- Provides a choice of care settings: home, adult day care center, assisted living facility, nursing home
- Provides a support system, including resources and advice on care selection
- Offers discounts on care providers and services to maximize benefits and extend the life of a claim
- Helps free family from caregiving burden
- Helps to provide asset protection: 401(k), pension, real-estate
- Benefits are flexible and can evolve over the life of the claim
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Great post! Too many people don’t think about Long Term Care insurance until it’s too late. It’s a shame to see how those who don’t have this coverage have their entire estates eaten alive by the rising costs of this care.
Thanks for the post. I enjoy your blog!
Jon:
Doesn’t that seem to be the way, wait until it’s too late and then pull a Homer Simpson like “doh”. How do we help people to fix that?
It’s tough! Especially when you have the Dave Ramseys of the world telling people to “NEVER” buy this coverage until you’re 60. (Because that’s when you’ll need it) I always counter that argument by saying that once you NEED insurance, you CAN’T get it. (And don’t take me wrong-Dave Ramsey is good with a lot of things. Advanced Planning just isn’t one of them)
I think it’s a matter of education, and of getting people more financially secure at a young age. Unfortunately, too many people reach their 50′s and 60′s and are so far behind financially, they cannot afford to buy long-term care and so they just cross their fingers and hope that they’ll be taken care of when it comes that time.
I’m 27 and I bought LTC. I had already bought every other piece of insurance I could get so I justified it by saying it was an extension of my disability coverage. Also, the company I bought it from pays dividends on the policies-so by the time I’m old enough that my premium is higher my dividends will help me with the costs.
Then again-I preach being proactive, and that may be TOO proactive. But, I wish my parents had been more, that’s for sure.
I would have to agree with Jon in that being proactive is the best way to go when it comes to this. It can’t hurt to set aside appropriate funds in the case that you or one of your family members needs long term health care.
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