Long-term care involves a lot of long-term planning. Seeing my grandparents who have dementia, among other illnesses, makes me realize why it is crucial to plan for long-term care as early as possible and while we are still healthy. Needless to say, there are plenty of emotional and financial costs involved when caring for the elderly. For those of us who have not yet reached that stage in our lives, this is a good time to think about potential strategies so that when the time comes, hopefully we can feel less stressed about the situation.
What is long-term care (LTC)?
Most people probably associate long-term care with nursing homes, but that is not the complete picture. It is helpful to think of long-term care as the support that a person needs in order to perform his/her activities of daily living (ADLs) during his/her later years [More on ADLs here]. This can mean receiving care at one’s own home or living in a nursing home or assisted living.
What are the projected expenses (in the U.S.)?
- Expenses vary from case to case. To give a rough idea though, in 2015, the average daily cost of a private room in a nursing home is $250, which is $91,250/ year (Nursing Home Cost). We can expect that prices will go up in the coming years.
- Adult day care/services can cost at least $10/day per person. This does not include additional services, such as transportation, giving the patient a shower, and outings.
- Also consider the person’s medications. If a person doesn’t have Medicare Part D, you may have to pay more out-of-pocket.
Options for LTC (in the U.S.)
More likely, Medicaid and Medicare will not be enough to pay off the bills. Given the trajectory of today’s financial systems, most people will be relying on their personal funds to pay for LTC expenses.
Here are two common ‘vehicles’ that people use to prepare for LTC:
- Traditional LTC – This type of insurance pays only for long-term care needs and is similar to auto insurance where there is no cash value.
- Life insurance + LTC rider – This type of insurance allows you to pay for long-term care expenses while still giving you a death benefit.
*See Nationwide’s Understanding and Planning for Long-term Care for more detailed information.
Some questions to consider
- How much will my LTC policy cost and what will it cover?
- How long will my LTC policy last?
- How much insurance coverage is appropriate for me? Note: It is cheaper to buy insurance when you’re younger and healthier.
- Which company will give me the best deal based on my needs and health?
Food for Thought
- People tend to live longer nowadays; therefore, funds also have to last longer.
- Make sure to get in touch with a trustworthy financial professional. In cases where a person has dementia, he will be unable to manage his finances. It is necessary to have established a strong relationship with someone who can help him with his funds.
- Take care of your health everyday. Live a healthy and positive lifestyle!
- Stay up-to-date with the latest financial vehicles/products and financial trends.