The Cost of Long-Term Care

Consider Risks & Have a Plan

What Will Long-term care cost?  In the Detroit Free Press on Sunday, June 23, 2019, Liz Weston discussed the cost of long-term care as we are gracefully greying. 

Statistics show that most people over 65 will eventually need help with daily living tasks such as bathing, eating or dressing. Men will need assistance for an average of 2.2 years and women for 3.7 years, according to the U.S. Department of Health and Human Services’ Administration on Aging. Many will rely on unpaid care from spouses or children.

More than a third of seniors will spend time in a nursing home, where the median annual cost of a private room is now over $100,000. Four out of 10 will opt for paid care at home. The median annual cost of a home health aide is over $50,000. Overall, half of people over 65 will incur long-term care costs, and 15% will incur more than $250,000 in costs, according to a study by Vanguard Research and Mercer Health and Benefits.

Financial planners suggest that everyone approaching retirement age should consider their potential risks and have a plan to deal with long-term expenses. Some options include long-term care insurance. The average annual premium for a 55-year old couple was $3,050 in 2019. As you age, the premiums are higher and those with chronic conditions will probably not qualify.

A second option is hybrid long-term care insurance. Life insurance or annuities with long-term care benefits now outsell traditional long-term care insurance by a rate of 4 to 1. The problem is that these typically require you to commit large sums such as $100,000 upfront or payments in installments over 5 or 10 years. These provide long-term care coverage. If the money is not used for long-term care, your heirs will receive the unused portion.

Selling your home is an option, as is a reverse mortgage, as long as one member of a couple remains in the home. The other option for those who don’t have money or savings is to rely on Medicaid, once all money has been exhausted.

It is important to consult with a financial planner as well as someone in the insurance industry for specific advice as to your situation.