Study Reveals Urgent Need for Long-Term Care Planning Amid Rising Costs and Consumer Concerns
As the population continues to age and the demand for long-term care services rises, many Americans are left unprepared for the financial and emotional challenges that come with aging. The OneAmerica 2024 Long-Term Care Consumer Study sheds light on the growing need for comprehensive long-term care planning, revealing key insights into how individuals are preparing—or failing to prepare—for their future care needs.
OneAmerica is a leading financial services company with a long history of providing insurance and retirement solutions to help individuals and families plan for the future. OneAmerica offers a range of products, including hybrid Long-Term Care Insurance policies.
Long-term care refers to a range of services designed to meet the medical, personal, and social needs of individuals who cannot perform basic daily activities independently due to aging, chronic illness, disability, or cognitive impairment.
These services primarily include assistance with everyday tasks such as bathing, dressing, eating, toileting, personal hygiene, mobility, and specialized care for conditions like dementia. Long-term care is typically provided in various settings, including the individual's home, assisted living facilities, or nursing homes, depending on the level of care required.
It is important to note that health insurance, including Medicare, does not generally cover most long-term care services outside of short-term skilled care. Therefore, you must either pay out of pocket, qualify for Medicaid, or have a long-term care insurance policy in place.
With care costs increasing and government programs offering limited coverage, the findings emphasize the critical importance of having a long-term care plan to protect your finances, access quality care, and provide well-being and peace of mind for loved ones.
The issue of long-term care is increasing with longevity. Rising demand for care services has created a crisis for many American families, many of whom were unaware that health insurance and Medicare only pay for short-term skilled care. The absence of coverage forces families to either step in as caregivers for their loved ones or seek professional care, whether at home or in a facility.
The challenge is that adult children often struggle to balance their careers and family responsibilities while caring for an aging parent, especially as the cost of professional long-term care continues to rise sharply.
Long-Term Care Services are Costly
The LTC News survey on long-term care costs provides a comprehensive overview of current and projected expenses for various long-term care services across the U.S. The national median cost for in-home care, based on a 44-hour week, now exceeds $5,000 per month. Additionally, the costs for assisted living, memory care, and nursing home care are also rising significantly. With added surcharges on top of base costs, even a well-planned retirement can be at risk of financial strain.
OneAmerica, in collaboration with Hanover Research, has released an in-depth examination titled Leading Tomorrow: 2024 Long-Term Care Consumer Study. This comprehensive study explores crucial elements of the current long-term care landscape, offering valuable insights into consumer attitudes and behaviors surrounding long-term care planning.
Key areas of focus include:
- Factors driving the demand for long-term care planning.
- Barriers preventing consumers from planning for long-term care.
- Consumer preferences for long-term care protection.
- How consumers intend to finance long-term care protection.
Key Takeaways from the Study
The research highlighted three significant concerns:
- Rising Need for Long-Term Care: A striking 74% of respondents believe they will need long-term care services in the future, yet only 33% feel confident in their current plans. This growing likelihood of needing care emphasizes the critical importance of early and comprehensive planning.
- Generational Differences: Younger adults (ages 40-49) appear more proactive, with 75% prioritizing long-term care planning and 55% feeling confident in their preparations. In contrast, only 17% of adults over 60 express confidence in their long-term care plans, reflecting a gap in preparedness among older generations.
- Cost Concerns: The perceived high cost of Long-Term Care Insurance remains a significant barrier. Over half (54%) of consumers cite the perceived cost as a major obstacle to securing coverage, with many juggling competing financial priorities.
How Much Does Long-Term Care Insurance Cost at My Age?
Importance of Long-Term Care Planning
As the need for long-term care services rises, driven by an aging population and increasing cognitive health challenges, planning for long-term care becomes essential.
People require long-term care for various reasons, with longevity being the primary factor increasing the need for these services. As you age, physical challenges become more prevalent, but memory issues and frailty due to aging are also significant contributors to the need for assistance.
According to the Alzheimer's Association, the number of older adults with Alzheimer's and other forms of dementia will rise sharply, and with it, the need for extended care. By 2060, nearly 13.8 million people aged 65 and older are expected to have Alzheimer's disease, emphasizing the increasing demand for extended care services.
Barriers to Planning
Despite 64% of respondents in the OneAmerica study prioritizing long-term care planning, significant obstacles remain, particularly around cost and confusion over options. Many consumers lack information about Long-Term Care Insurance products and are uncertain where to turn for reliable guidance.
Although resources like LTC News provide helpful information on long-term care planning, many financial advisors and insurance agents have limited expertise on the subject, its impact on families, and the products available to address these challenges.
There are only a few Long-Term Care Insurance specialists, but they are often the most equipped to help consumers find affordable solutions for managing the costs and burdens of aging.
Since government programs like Medicare offer minimal coverage for long-term care, covering only short-term skilled nursing care, and Medicaid provides broader coverage but requires individuals to have limited financial resources, many middle-income families are left vulnerable.
Hybrid Solutions Gaining Popularity
While traditional Long-Term Care Insurance policies remain the most affordable options for many consumers, some feel they are more challenging to navigate, mainly due to conservative underwriting.
Hybrid Long-Term Care Insurance products are gaining traction, especially among younger consumers. According to the study, nearly 69% of respondents aged 40-49 said they would favor purchasing a hybrid LTC policy over traditional options.
These policies allow for more flexible use of funds—whether to cover long-term care costs or provide a death benefit if care is not needed. Additionally, hybrid policies offer consistent premiums and the potential to leave a legacy to loved ones, making them attractive for those planning for both long-term care and estate preservation.
Why Consumers Are Interested in LTC Protection?
A major driver behind the growing interest in long-term care (LTC) protection is the desire for peace of mind—ensuring that future care needs won't drain finances or become a heavy burden on family members.
The study revealed that 52% of respondents prioritize having a plan to reduce anxiety about their future, while 46% seek protection from the financial strain that long-term care expenses could cause.
Financing Long-Term Care Services
Many Americans still plan to rely on personal savings or assets to cover future long-term care costs. However, as the OneAmerica study highlights, self-funding can be risky. For example, a couple aged 65 today is expected to spend nearly $400,000 on standard healthcare in retirement—without factoring in LTC expenses. If one partner develops dementia, these costs could double, potentially wiping out retirement savings.
LTC Insurance offers a safeguard to mitigate this risk. Yet many consumers are still unaware of the actual costs and benefits of LTC coverage. The study emphasizes the need for insurance and financial professionals to educate clients about the value of LTC Insurance, particularly how it can prevent financial hardship during a long-term care event.
Planning for Tomorrow
The findings from the OneAmerica 2024 LTC Consumer Study underscore the urgent need for comprehensive LTC planning, especially as the population ages. Whether through traditional LTC Insurance or hybrid policies, consumers are looking for solutions that provide financial security, peace of mind, and flexibility in care options.
With the costs of long-term care expected to rise sharply in the coming decades, starting the conversation early—before retirement—is essential to ensuring a secure future.