The needs for long-term care

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Long-term care (LTC) comprises a broad range of paid and unpaid care assistance that people need when experiencing difficulties completing self-care tasks. Aging, chronic illness, or disability are all reasons why individuals and seniors might require long-term care. The data show that 69 percent of seniors will require some type of long-term services and supports (LTSS) [1].​ Americans are very concerned about long-term care costs in retirement. Eighty-seven percent are concerned generally about rising costs, while 80 percent are worried about the rising cost of long-term nursing care. A large share of Americans 66% are worried about rising healthcare costs in retirement, 75% are concerned about rising housing costs in retirement, and 66% are worried about increasing costs to get help with everyday chores like cleaning and cooking.

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While long-term care is often associated with aging, young people may also find themselves in need of such services due to unexpected events or chronic health conditions. Serious accidents, congenital disabilities, or early-onset diseases can necessitate long-term care and support for daily activities well before retirement age. For younger individuals facing these challenges, having long-term care insurance can provide crucial financial protection and access to necessary care services. It ensures that, regardless of age, individuals can receive appropriate care without depleting their savings or relying solely on family members for support. Planning for long-term care at a younger age can be a proactive step towards safeguarding one's future and maintaining financial stability in the face of unforeseen health issues.

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The rising costs and concerns of long-term care

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According to a new NCOA report published in 2024, a major struggling expense for older adults is long-term services and supports (LTSS, or 'long-term care'), which can range from help with daily living activities to medical care in a skilled nursing facility. Data revealed that 69 percent of seniors will require some type of long-term care. Many Americans underestimate the likelihood of needing long-term care, though more than half of adults over 65 will require it for less than two years, and about one in seven will need care for more than five years. Covering even a year of care can be financially overwhelming: in 2018, the average annual cost of a private room in a nursing home was $105,485, while home health aides cost around $37,440. The costs of LTSS have consistently risen, with nursing home and adult day services increasing 3.2% annually between 2013 and 2018, and home care services going up by 1% per year during the same period. These costs continued to climb in 2020. The financial burden of LTSS is subject to economic pressures, which can limit access to necessary care and leave many older adults without the long-term care they need.

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According to Genworth's 2023 survey, the national median cost of a private room in a nursing home now exceeds $116,800 per year, reflecting a 4.9% increase from 2022. Meanwhile, home health aide services rose by 10%, reaching a median cost of $75,500 annually. Assisted living facilities have seen more moderate cost increases, with a 1.4% rise in 2023 to about $64,200 per year. These increases are driven by factors like inflation and a shortage of skilled workers, particularly in home care and nursing facilities. With millions of Baby Boomers aging, demand for long-term care services continues to rise, intensifying the need for skilled caregivers, which further pressures costs. Planning for these expenses is critical, as the financial burden of long-term care can quickly deplete retirement savings​.

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Long-term care is not covered by Medicare and regular health insurance

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Many people mistakenly believe that Medicare or standard health insurance will cover long-term care needs in retirement, but this is not the case. Medicare is primarily designed to cover short-term medical expenses, such as hospital stays, doctor visits, and prescription medications. While it may cover short-term rehabilitation services after a hospital stay, such as physical therapy, it does not provide coverage for the ongoing, non-medical care that many individuals need as they age. This includes assistance with daily activities like bathing, dressing, eating, or long-term residence in assisted living or nursing home facilities.

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Standard health insurance plans are similarly limited when it comes to long-term care coverage. These policies focus on addressing acute medical conditions and illnesses, but they do not account for the extensive personal care needs that come with aging, chronic conditions, or disabilities. Long-term care is often required for months or even years, and without proper coverage, the financial burden of these services can fall entirely on individuals or their families, potentially depleting retirement savings or forcing difficult financial decisions.

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Given the limitations of Medicare and regular health insurance, planning for long-term care through other options, such as long-term care insurance, is crucial. These policies are specifically designed to cover the costs of extended care services, offering financial protection and ensuring access to necessary care when Medicare and traditional health insurance fall short. Understanding these gaps in coverage is essential for ensuring financial security and peace of mind in retirement.

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Some people may also mixed the long-term care insurance with critical illness insurance. Long-term care insurance is not the same as critical illness insurance, as they address different financial and healthcare needs. While critical illness insurance provides a lump-sum payment if you are diagnosed with a serious illness like cancer or heart disease, it is typically used to cover immediate expenses such as medical bills or lost income. In contrast, long-term care insurance specifically covers the cost of ongoing care required for daily activities over an extended period, such as assistance with bathing, dressing, and eating, often due to aging, chronic illness, or disability. Long-term care insurance is designed to help with prolonged personal care needs, while critical illness insurance is focused on managing the financial impact of sudden, serious health conditions.

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Secure your long-term care coverage

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In conclusion, having long-term care insurance is essential for protecting your financial future and ensuring access to quality care as you age or face chronic health conditions. The costs of services like in-home assistance or nursing home care can quickly deplete savings, putting a strain on both individuals and their families. With long-term care insurance, you create a financial safety net that covers these expenses, allowing you to preserve your assets and avoid placing a heavy burden on loved ones. Additionally, long-term care insurance offers peace of mind, allowing you and your family to focus on enjoying your life without worrying about the financial strain of future care needs. Schedule a free consultation today with Faundare Family Financial Strategist to learn more about your opportunities to get access to long-term care coverage. ​

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Reference:​

[1]https://www.nirsonline.org/reports/retirementinsecurity2024/#:~:text=When%20asked%20if%20the%20nation,achieve%20financial%20security%20in%20retirement.

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