Nursing Homes May Bankrupt You. In-Home Care is Not Cheap. Better Have a Plan Now
As life expectancy continues to rise, the intricacies of retirement planning have taken on a new dimension, with the financial strain of long-term care looming large over the dreams of a tranquil post-work life. The escalating costs of long-term care services, coupled with soaring labor expenses, are rapidly depleting the savings of American families, reshaping lifestyles, and leaving even well-prepared couples grappling with unforeseen financial pressures.
This growing need for long-term care, exacerbated by the dramatic cost increases, places an immense burden on families unless they are cushioned by Long-Term Care Insurance, which can alleviate some of the financial stress. The COVID-19 virus crisis has cast a spotlight on the vulnerabilities of nursing homes, prompting a shift towards alternative care options despite a decade-long decline in nursing home usage.
Nonetheless, nursing homes, assisted living, and memory care facilities have intensified their efforts to mitigate infection risks, striving to offer safer environments. In-home care providers work hard to maintain safety and provide quality care.
Yet, the fact remains that quality care comes at a high price. Whether it's in top-tier nursing homes, assisted living facilities, or home health services, the costs are substantial. These expenses can rapidly erode assets, impacting income and lifestyle, unless adequately planned for with sufficient resources or a comprehensive long-term care strategy.
The majority of long-term care takes place at home, in adult day care centers, or within assisted living facilities. Despite nursing homes being the costliest, the expense associated with all forms of long-term care can substantially strain family finances and well-being.
The cost of this care does vary depending on where you live. According to the LTC NEWS Cost of Care Calculator, the national average of skilled care in a nursing home is over $111,121 a year. But costs of all types and levels of long-term health care are also rising. Depending on where you live, some types of care could be in short supply.
Most Extended Care Starts at Home
Most surveys suggest that people wish to age at home, and the good news is that most long-term care is provided in your own home. According to the American Association for Long-Term Care Insurance, about 73% of new LTC Insurance claims start with the policyholder receiving care in their home.
Some 18% begin their claim receiving benefits at an assisted living facility. Only 8% start benefits in a nursing home. or other facilities like adult day care centers, assisted living facilities, memory care centers, and traditional nursing homes.
More people than ever will need long-term health care due to declining health, mobility problems, and other aging-related issues, including dementia. Since the chance of needing some type of care service in your life is so high, addressing the financial costs and burdens of aging is a vital part of an overall retirement plan.
Don't Expect Health Insurance or Medicare to Pay for Long-Term Health Care
Traditional health insurance, including Medicare and its supplements, offers very limited coverage for only skilled services, leaving a significant gap in long-term care coverage. The majority of long-term care needs, which are custodial in nature, such as assistance with daily living activities or supervision due to memory loss, are not covered by these insurance plans, with Long-Term Care Insurance being the notable exception.
Many deem this option less attractive due to multiple factors, with Medicaid's lower reimbursement rates to providers translating into fewer choices and potentially lesser quality of care.
In 2023 alone, leading insurance companies disbursed over $14.1 billion in long-term care benefits, a significant portion of which went towards in-home care. This statistic raises an important question about personal preparedness: Are you equipped to handle the escalating costs of long-term care and the subsequent impact on your loved ones in the years to come?
Family Members or Spouses Are Not Best for Caregiving
Professional care comes at a high cost, and caregiving itself is a demanding task. It's unrealistic to expect your children or spouse to take on the role of caregivers, as they will have their own careers, families, and obligations to manage. Moreover, age spares no one, and the idea of a spouse or an older child assuming the caregiver role is not a sustainable solution.
This is why experts stress the importance of a preemptive plan before retirement. Numerous American families rely on Long-Term Care Insurance to protect their income and assets, alleviating the burden and anxiety on loved ones.
As you and your spouse age, the notion of caregiving within the family becomes even less feasible. Aging is a universal process, underscoring the need for forward-thinking and planning.
Long-term care is not just a financial matter; it's a profound family concern. Many individuals prefer not to impose the dual burden of caregiving and managing future care on their families, a responsibility that often falls on a daughter or daughter-in-law in the absence of a solid plan.
Family caregivers, typically untrained and unprepared, find themselves in a highly stressful, physically and mentally challenging role. Balancing caregiving duties with their careers and family responsibilities can be overwhelming, further highlighting the necessity of a well-structured plan for long-term care.
A recent article in Motley Fool written by Selena Maranjian, suggests the cost of extended long-term health care significantly impacts your future retirement. The costs could even be to the point where you may end up spending down a majority of your assets, forcing you to access the Medicaid program.
There are many things to look forward to in the future, but there are plenty of things we worry about, too. Many people worry about their health and dread certain potential outcomes, such as becoming unable to care for themselves and perhaps ending up in a nursing home. That alone is an unpleasant thought, and nursing home costs can be another.
She writes that nursing home stays are less today than in the past. However, this is not due to fewer people needing extended care services. More home care options are available in addition to adult day care and assisted living. Today, there are just more options than ever before for long-term health care.
The article suggests that Long-Term Care Insurance's costs have increased in recent years. However, premiums are affordable at the ages most people start researching coverage. For people in their mid-40's to age 65, you will find premiums very affordable, especially if you are married and in good health.
Long-Term Care Insurance Cost: Factors, Considerations and Price Ranges
Finally, remember that, when you start having trouble caring for yourself, there might be less expensive options than a nursing home, at least for a while. It's worth spending some time now thinking about how you would pay for nursing home costs -- or other long-term care costs, for that matter. A little planning now might prevent panic or desperation later.
Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI), a leading consumer advocacy group, reminds consumers that care starts at home.
When it comes to Long-Term Care, the vast majority of care is provided in the home. Just over half of all Long-Term Care insurance claims start with the policyholder receiving care at home. First, that's where most of us would prefer to be as opposed to a nursing home setting and the insurance policy benefits make it possible for people to get that needed care at home.
Slome says there are many ways to design an LTC policy.
People buying Long-Term Care insurance today need to understand that having insurance that pays some but not all of the cost is a prudent way to plan.
Long-Term Care Insurance Offers an Affordable Way to Prepare Family and Finances
Affordable Long-Term Care Insurance gives you access and control. You will have your choice of quality care in the setting you desire without placing a burden and stress on your loved ones.
Plus, policies protect your income and savings. Your family doesn't need to go into a crisis because of your future aging and health needs. You can safeguard your income and assets and ease family stress with an affordable Long-Term Care Insurance policy.
The key is to plan before you retire when premiums are very affordable, and you still enjoy good health. Start your research by reading The Ultimate Long-Term Care Guide.
Always use an experienced Long-Term Care Insurance specialist. Most general insurance agents and financial planners are not qualified in this area.
What Is A Long-Term Care Insurance Specialist & How Can They Help You?
Be sure your specialist works with the major insurance companies, not just one or two. Also, be sure they have enough experience where they have processed claims.
Find a trusted and experienced Long-Term Care Insurance specialist by clicking here.
Don't ignore the future costs and burdens of aging. Keep control over your finances, and maintain your independence by planning now. Your health can change at any time - your fairly good health today allows you the opportunity to prepare.