Long-term care isn’t just for the elderly

By Stacia Vetter and Gerald Coggin

All of the attention these days on the Affordable Care Act has Americans focused on health insurance and how it affects family finances, and that’s a good thing. But with November being “Long-Term Care Awareness Month,” it’s a good time to focus also on long-term care insurance, something too many Americans forget to include in their retirement planning.

At least 70 percent of people over age 65 will require long-term care services at some point. Such care can be very costly and, contrary to what many people believe, it isn’t standard in regular health plans and it isn’t covered by government programs such as Medicare.

Long-term care (LTC) is provided in a skilled care or assisted-living facility, or at home, and involves assistance with daily personal care activities that a person can no longer do for themselves or by themselves because of the effects of aging, illness or injury. LTC often includes the supervision you might need because of a severe cognitive impairment such as Alzheimer’s disease.

Think of the first 30 minutes of your day: getting up, using the bathroom, bathing, dressing, getting breakfast. Typically, when someone needs long-term care, they need help with these types of activities of daily living.

You can need LTC at any point in life, because of conditions such as a stroke, cancer, spinal cord injuries or disabling illnesses such as multiple sclerosis or Parkinson’s disease that can happen at any age. Government data shows that about 40 percent of LTC is provided to people under age 65.

About 85 percent of LTC occurs in a person’s home — families taking care of their own. For many Americans, that is their “financial plan” for long-term care. But with many families spread across the country and unable to provide such care, that’s where long-term caregivers come in, and it’s expensive.

Neither Medicare nor Medicaid is the answer. Medicare covers acute rehabilitative and skilled care for a maximum of 100 days, and Medicaid only kicks in if you’re at or near the federal poverty level.

Long-term care can ravage your savings. According to the Federal Long-Term Care Insurance Program website, here in Nashville home health care will run, on average, $17 per hour, or more than $26,500 per year, while assisted living costs more than $44,000 per year and care in a nursing facility will top $67,000 per year, on average.

That federal program provides LTC insurance for federal employees. If that’s not you, we urge you to ask an insurance broker about your options for LTC insurance.

A typical 55-year-old male can purchase three years worth of long-term care coverage, which would buy $6,000 worth of care per month for three years — for an annual premium of about $2,000 — or about $170 a month. Such a policy would include an “inflation protector” so that, over the years, that “bucket of money” would grow as the cost of care rises.

If you don’t need $6,000 worth of care per month, your benefits would last longer than three years.

It is tempting to think “it won’t happen to me,” and unless you’ve written $6,000 checks every month to a nursing facility, the reality of the risk may not set in. But long-term care is expensive, and LTC insurance can transfer that risk from your retirement savings to an insurance product, protecting your assets so that they can be passed on to your children.

That’s why we often see adult children helping their parents pay the premiums, providing financial peace of mind for both generations.

###

Stacia Vetter is an assistant vice president for NHC and directs NHC’s long-term care insurance program. Gerald Coggin is senior vice president of ancillary services and corporate relations at NHC. This op-ed was originally published Nov. 8, 2013, in The Tennessean. You can download the PDF file here.

You can calculate the average cost of long-term care in cities across America using this tool on the Federal Long-Term Care Insurance Program website.