Who Will Need Long-Term Health Care?
Polling shows that about 40% of people aged 40 or over believe almost everyone is likely to require long-term care services at some point in their lifetime. However, based on the number of people who actually plan for the future costs and burdens that come with aging, it appears everyone is pointing to someone else.
The poll was conducted by the Associated Press-NORC Center for Public Affairs Research. The results showed that only 25 percent think they will need long-term care for themselves.
Most people would acknowledge that their health and body have changed over the years. Just compare yourself from age 25 to today. Yet, based on polling, we seem to disassociate these changes with the increased risk of needing long-term health care.
People Think They Can Depend on Health Insurance/Medicare
The research study suggests that many people think they can depend on Medicare and Social Security to pay for their future long-term care costs. However, the fact remains that health insurance, which includes Medicare and supplements, will not pay for most of these costs.
Social security might defray some costs; however, long-term care costs are expensive today and continue to grow every year. Your future (or current) social security benefit will not be even close to being adequate to pay for these costs alone.
The LTC NEWS Cost of Care Calculator shows how expensive long-term health care expenses are today. The calculator also shows how the costs will increase in the decades ahead based on increased labor costs.
Long-Term Care Costs Depend on Location
The costs of extended care vary depending on where you live. For example, in Illinois, the average cost of in-home care runs over $4500 a month (based on 44 hours a week). However, Downstate costs are less than the Chicago area as home care runs, on average $4600 a month, compared to Springfield, where the same amount of care averages $3900 a month.
In Georgia, you will see lower costs compared to Illinois, on average. The state average for in-home care runs $4100 a month, mainly driven by Atlanta's higher costs. In Macon, the average cost runs $3400 a month for in-home care.
Don't forget, assisted living, memory care, and nursing home costs will be higher. However, most long-term care is delivered outside nursing homes. The polling says most people would want future long-term health care in their homes. Experts believe this trend will continue in the post COVID world.
Tax Benefits with LTC Insurance
There are federal tax incentives available for some people when they own an affordable Long-Term Care Insurance policy, plus some states offer tax benefits. In forty-five states, Partnership Long-Term Care Insurance policies are available that offer dollar-for-dollar asset protection. Find your state here.
You can also use the pre-tax money from a Health Savings Account to pay premiums.
Policies with Death Benefits
Several insurance companies offer asset-based or "hybrid" Long-Term Care Insurance plans. These policies combine the benefits of a life insurance death benefit with long-term care. Careful; however, generally, you want a policy that is a 7702(b) policy. This is Federal government jargon that defines the policy as a Long-Term Care Insurance policy.
There are life insurance policies that categorized as 101(g) only and are generally referred to as "Accelerated Death Benefit for
Chronic Illness" riders. With these products, the term "long-term care" can't be used in the marketing or sales of the product by federal law since they do not meet the federal definition of long-term care.
Some 101(g) policies require the insured to be "terminal" to accelerate the death benefit for extended care. They all require the insured to have a permanent need for extended care; however, not all long-term care situations can be classified as "permanent."
Avoid Being a Burden on Family
A recent LTC NEWS survey of Long-Term Care Insurance specialists reports that many consumers still think their adult children might be able to provide future care. However, in recent years fewer consumers feel that way compared to today.
The survey also shows that most consumers overwhelmingly say they don't want to burden their families. Yet, a plan that includes family caregivers is precisely the type of burden they wish to avoid.
Family caregivers face significant physical and emotional stress. The demands of being a caregiver must be balances by career and family responsibilities.
Many Long-Term Care Insurance policies will assist family members during the claims process to reduce the stress and burden. In addition, some plans offer case management where they will even help find caregivers or facilities and coordinate that care.
Seek the assistance of a licensed and unlimited Long-Term Care Insurance specialist to navigate these different policies and match you with the best coverage at the best value. Premiums and underwriting criteria differ between insurance companies. Premiums can vary over 100%. A specialist will help.
It is best to start planning before retirement, ideally in your 40s or 50s.