In-Home Care Important to Most People - Many Anticipate Facility Care

Recent years have brought heightened awareness to the challenges of aging, shifting health dynamics, and the implications of increased life expectancy on long-term health care. The pandemic has further emphasized the significance of long-term care, with numerous families grappling with its repercussions.

According to an insurance survey, while most respondents prefer to receive care at home, many anticipate requiring facility-based care such as assisted living. Nationwide Financial, a frontrunner in long-term health care solutions, released its ninth consecutive annual survey last year. The findings reveal that 86% of adult participants prefer to receive long-term care in their own homes, underscoring a general aversion to nursing homes.

Rather Die Than Live in a Nursing Home

Nationwide Retirement Institute Long-Term Care survey also revealed that 60% of baby boomers say they would rather die than live in a nursing home. However, many people reveal they know little about funding care costs and available care options.

Other key findings of the survey:

• 56% of boomers expect to be in their own homes when they require long-term health care

• 23% of boomers expect to need assisted living facility care

• 10% of boomers expect to live with a family member and have them provide their care

• 6% of boomers expect to be in a nursing home

• 2% of boomers expect to need adult day care

Health Insurance and Medicare Not Options for Funding Future Care

Health insurance, including Medicare and supplements, pay a limited amount of skilled long-term care services, but most long-term health care is custodial (help with daily living activities or supervision due to dementia) and not covered at all by health insurance, Medicare, and supplements. 

Medicaid will pay for long-term care, including custodial care, but you must have little or no income and assets to qualify. Long-Term Care Insurance will pay for all levels of care in all settings, including at home, but you must purchase a policy before your health changes and you require care.

Most Families are Unprepared for High Costs of LTC

Often, families go into crisis mode when an older parent requires care leaving adult children to become caregivers or find professional care paid for from their parent's savings - creating a financial crisis. 

The costs of long-term health care services are rising rapidly because of increasing demand and labor costs that are growing every year. Nursing homes are the most expensive and average over $100,000 a year. Home care and assisted living are more affordable but not cheap and still create a financial strain on families. 

The costs will vary depending on where you live. For example, according to the LTC NEWS Cost of Care Calculator, a month of in-home care, based on a 44-hour week, in Charlotte, North Carolina, averages over $4400 a month today. But, in twenty years, that same care is expected to run over $7500 a month - North Carolina Long-Term Care Resources.

Base assisted living facilities costs run on average $4300 a month in Charlotte, but that base cost should run over $7300 a month in twenty years. Keep in mind that assisted living facilities will add surcharges on top of the base cost depending on the amount of care you may require.

Compare Charlotte with Bridgeport, Connecticut. Home care in Bridgeport averages about $4900 a month today and over $8300 a month in twenty years. The base assisted living costs average about $6500 a month today, and in twenty years, it should run about $11,000 a month. If you need a nursing home in Bridgeport, expect to pay at least $18,500 a month today, but in twenty years, that will average over $31,500 a month Connecticut Long-Term Care Resources | LTC News.

You can find the current and future cost of all types of long-term health care services where you live, along with state-specific information on funding solutions, regulations, tax incentives, and available care options by using the LTC NEWS Cost of Care Calculator page - Cost of Care Calculator - Find Your Location.

LTC Insurance Helping Most People to Stay at Home

For decades the criticism of Long-Term Care Insurance was it covered only nursing home care, and nobody wanted to go to a nursing home. Yet, since the late 1990s, LTC Insurance has been comprehensive and covers all types of care in all care settings, including in-home care. 

Claims data compiled by the American Association for Long-Term Care Insurance (AALTCI), a national advocacy and education group, says most LTC Insurance claims start with in-home care.

According to the Association, about 73% of new Long-Term Care Insurance claims start with the policyholder receiving care in their own home. Some 18% begin their claim receiving benefits at an assisted living facility. Only 8% start benefits in a nursing home. The data is based on traditional LTC Insurance policies constituting most of the policies purchased over the past three decades.

"You buy insurance to protect against real risks and real needs. The risk of needing care in your own home is real," said Jesse Slome, the executive director of the AALTCI.

Need for Long-Term Care Happens at All Ages - Increases with Aging

Advances in medical science keep us alive, but these advances also increase the risk of needing help with daily activities or supervision due to a decline in cognitive ability. 

The AALTCI notes that 69% of Long-Term Care Insurance policyholders start receiving benefits between the ages of 75 and 89.

Long-Term Care Insurance is medically underwritten and cannot be purchased "when you need it." Premiums are calculated based on several factors, including your age when you obtain coverage, health, family history, and the total amount of available money in the policy. The perfect time to purchase LTC Insurance coverage is before you retire, ideally in your 50s.

Unfortunately, many people don't do any planning until the need for care is either imminent or already present. At that point, it is too late because insurance companies will only issue policies to those who can health qualify.

According to the AALTCI, the average age for those buying new traditional LTC Insurance remains between 56 and 57. 

Confusion with Long-Term Disability Insurance with Long-Term Care

The Nationwide study conducted by Harris Polls suggests that many working Americans are confusing disability insurance benefits provided at work with actual Long-Term Care Insurance. 

According to the survey, 39% of millennials claim they own Long-Term Care Insurance. Only 26% of GenXers and 19% of Boomers indicate they own an LTC policy. 

Most Long-Term Care Insurance is purchased outside the workplace and is usually unavailable. According to experts, the few available plans typically have minimal benefits and are unsuitable for long-term care planning. 

Disability insurance available through the workplace replaces a small portion of a person's salary if they cannot work and is usually not portable if you leave the job. Disability insurance does not pay for any long-term health care.

Several Insurance Planning Options Available

There are several options to prepare for future declining health and the costs and burdens of aging. Most consumers select traditional Long-Term Care Insurance; however, they typically have the most conservative underwriting rules. Every company has its own criteria, and a qualified Long-Term Care Insurance specialist can help you determine both suitability and eligibility. 

Traditional policies can also be "partnership certified." Partnership Long-Term Care Insurance offers additional dollar-for-dollar asset protection allowing you to shelter assets based on the total amount of benefits paid by the policy - What is a Long-Term Care Partnership Policy?

There are tax benefits also available - Long-Term Care Tax Benefits Guide.

However, a growing number of consumers have an interest in asset-based LTC Insurance, known as Hybrid policies. These policies combine life insurance or an annuity with qualified long-term care benefits. However, they cost much more - but include death benefits. Caution, be sure you only consider a policy that meets federal guidelines under Section 7702(b) of the U.S. Code. 

There are several consumer protections in any policy that meets 7702(b) guidelines that are vital to the policyholder - What Are Long-Term Care Insurance Regulations, and How Do They Protect Policyholders?

Some states also offer limited duration or 'short-term care' plans that offer limited benefits but have more relaxed underwriting rules. 

Planning before the crisis will be easier on your family and your finances. We see changes in our health, body, mobility, and mind as we grow older. The goal is to plan before these changes limit your options or become too expensive to consider.