Long-Term Care
“I Won’t Need Long-Term Care, I’ll Just Die In My Sleep.”
That’s what my mom said years ago when my dad was purchasing a Long-Term Care plan through the Federal Government. Prior to being in the insurance business, I had talked to my parents about getting some Long-Term Care insurance. When the time came, my dad purchased himself a policy and filled out the application for my mom…but she refused to sign it. And my dad was the one paying for it.
Guess what? Sadly, my dad was killed in a car accident and never needed his Long-Term Care insurance. However, five months after my dad’s accident, my mom had her own. She, miraculously survived. And thankfully, she had great healthcare coverage. (Remember what I said about the importance of good Medicare coverage?) What she didn’t have though was ANY Long-Term Care coverage…AND SHE NEEDED IT. For almost 14 years my mom lived with our family and we cared for her. If she just had some Long-Term Care coverage, then our family (wife and three kids) could have used the Long-Term Care insurance to cover In-Home care for periods of time so that we could receive respite care and take the occasional vacation.
Survey Said!
Here are the answers to two questions in the most recent update of an ongoing survey of buyers and non-buyers of Long-Term Care insurance.
Survey Question 1: It is important to plan now for the possibility of needing LTC services.
Survey Answer: 99% of buyers either agreed or strongly agreed (36% agreed, 63% strongly agreed). And 92% of non-buyers either agreed or strongly agreed (31% agreed, 61% strongly agreed). I wonder if those non-buyers ever purchased Long-Term Care Insurance?
Survey Question 2: I worry about how I would pay for care, if needed.
Survey Answer: 73% of buyers agreed or strongly agreed (50% agreed, 23% strongly agreed). And 76% of non-buyers agreed or strongly agreed (47% agreed, 29% strongly agreed).
Survey Question 3: Having long-term care plans in place makes things easier for adult children.
Survey Answer: 94% believe a long-term care plan would make things easier on adult children.
Survey Question 4: Having a long-term care plan would help me feel more confident about my financial future
Survey Answer: 87% of Americans surveyed acknowledge that having a long-term care plan would help them feel more confident about their financial future.
Wouldn’t you think that with survey results like that more people would have some form of Long-Term Care Insurance?
“The Lack Of Long-Term Care Insurance Can Devastate Your Financial Plan!”
That’s what CNBC stated in a recent article. (https://www.cnbc.com/2019/10/14/lack-of-long-term-care-insurance-can-devastate-your-financial-plan.html)
It’s estimated that you have a 70% chance of needing some form of Long-Term Care services in the future. (https://aspe.hhs.gov/basic-report/what-lifetime-risk-needing-and-receiving-long-term-services-and-supports)
LONG-TERM CARE COSTS
Check out these costs (based on national annual median costs):
- Adult Day Care: $19,240
- Home Health Aid: $54,912
- Assisted Living Facility: $51,600
- Nursing Home Semi-Private Room: $93,075
- Nursing Home Private Room: $105,850
HERE’S SOMETHING TO THINK ABOUT
If 70% of the people will have some Long-Term Care need during retirement…Then why in world do only 13% of those 65 and older have insurance to cover their potential Long-Term Care costs?
NOW CONSIDER THIS
Did you know that the average stay for a person with long-term care needs in a nursing home/long-care facility is 835 days? Multiply those 835 days by $255 per day for the average semi-private room in a nursing home/long-term care facility and you have a grand total of $212,925. (Source: https://mylifesite.net/blog/post/so-ill-probably-need-long-term-care-but-for-how-long/ and https://www.longtermcarelink.net/eldercare/nursing_home.htm)
SO, WHAT DO YOU THINK?
Are all the people 65 and over without Long-Term Care insurance affluent enough to be able to easily afford having to potentially pay out over $200,000 for their long-term care needs? What do you think? I don’t think so!
As a matter of fact, according to the Kaiser Family Foundation, ONLY 5% of Medicare beneficiaries have a savings of over $1.3 million dollars. (Source: https://www.kff.org/medicare/issue-brief/income-and-assets-of-medicare-beneficiaries-2016-2035/)
Maybe you’re thinking that Medicaid will cover them…or you. Medicaid will indeed cover nursing home costs…but only if you qualify. And only about 20% of Medicare beneficiaries qualify for any form of Medicaid.
Half of Medicare beneficiaries have savings of less than $75,000. As you can see, if any of these people who wouldn’t qualify for Medicaid end up with a long-term care need…they will end up dead broke, financially, before they are dead physically. Pretty scary. I guess the good part for these people is, once their money is gone in a matter of months…they will qualify for Medicaid and end up in the care of the state.
Where does that leave you once you are retired? With as little as 5% of Medicare beneficiaries having the assets to self-fund any long-term care needs and only 20% of Medicare beneficiaries able to qualify for Medicaid assistance—that leaves 75% of retirees and Medicare beneficiaries with less options. We’ll explore these options in the next section of Why & Who.
Long-Term Care Insurance Is A Fundamental Need For Most People
Other than having the proper Medicare coverage, a good Long-Term Care plan is the next most important insurance to consider and obtain to build your Retirement Insurance Pyramid™.
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