How Much Does Long-Term Care Cost?

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How Much Does Long-Term Care Cost?

Health-Wellness_Money_StethescopeMoneyThe fact that you might need long-term care doesn’t mean that you have to pay someone to provide it. Many people who need help get it for free from a relative or friend, usually at home. In a recent survey of people over 50, roughly 90 percent said they expect to be the primary caregiver if their spouse or partner needs long-term care.

But even unpaid caregivers need a break from time to time, or have full- or part-time jobs that prevent them from caregiving throughout the day. If you do pay someone to provide assistance with ADLs, the cost of long-term care depends on three factors – the general level of charges in your part of the country, the specific expense rate for the services you need, and how long the need for care lasts.

In August 2005, the average cost for a month in a semiprivate room in a nursing home ranged from a low of $3,000 in Shreveport, LA, to a high of $9,250 in New York City, according to a survey by the MetLife Mature Market Institute (MMI). A year-long stay translates to $36,850 in Shreveport and $112,400 in New York City.

The MMI also surveyed covered costs of Assisted Living and Home Health Care. In August 2005, the lowest average monthly base rate for an Assisted Living facility was $1,650 in Jackson, MS area and the highest was $4,300 in the Stamford, CT. area.

In August 2005, the lowest average hourly rate for a home health aide was $12 in Shreveport, and the highest was $23 in Rochester, MN. If you need a home health aide around-the-clock, these rates translate to a daily rate ranging from $288 to $552, or a monthly rate of $8,640 to $16,550.

Finally, don’t forget that long-term care costs, like most health care costs, are rising faster than the general rate of inflation. The bottom line? A four-year-or-longer stay in a nursing home could cost $200,000 to $450,000 or more (in today’s dollars). If you can’t pay this out of your own pocket and aren’t poor enough to qualify for Medicaid, you should consider buying long-term care insurance.

Source: Insurance Information Institute, “How much does long-term care cost?”
http://www.iii.org website. Accessed June 3, 2014. http://www.iii.org/articles/how-much-does-long-term-care-cost.html

© Copyright 2014. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Should I Buy Long-Term Care Insurance?

People_SeniorCoupleBikesIf you need long-term care services and have to pay to obtain them, what financial resources could you call on? Do you have enough to pay for four or more years in a nursing home, an assisted living facility, or home health care?

If you’re over 65, don’t rely on Medicare or private health insurance. Medicare doesn’t pay for custodial care, and private health insurance rarely pays any of the cost of long-term care.

If you expect to have very little money when you need long-term care services, you might qualify for Medicaid, a government program that pays the medical and long-term care expenses of poor people. If you expect to be in that situation, you probably shouldn’t buy long-term care insurance, because your state’s Medicaid program will pay your long-term care expenses. Buying long-term care insurance would only save the state—not you—money. The exception is if you live in California, Connecticut, Indiana, or New York, states that have a Partnership for Long-Term Care program. For residents of these four states, buying long-term care insurance does offer an additional benefit.

If you expect to have a lot of money when you need long-term care services, you also probably shouldn’t buy long-term care insurance. Instead, you should plan to pay for the care “out of pocket”—that is, as a regular expense. One financial advisor suggested in a newspaper interview that if your net worth is in the $1.5 million range, not including the value of your home, you could safely skip buying long-term care insurance and treat long-term care expenses, if they arise, as you do your other bills.

If you fall in-between these two categories, owning long-term care insurance, like all other insurance coverages, offers peace-of-mind benefits as well as financial ones. For example, a recent survey of people age 50 and over asked how confident they were that they could pay for long-term care services if they needed them. Among those with long-term care policies, 52 percent said they were very confident and another 40 percent said they were somewhat confident. Among those who didn’t own a long-term care policy, only 8 percent were very confident and only 27 percent were somewhat confident.

But if you’re under 85— and especially if you’re under 65—that doesn’t mean you should ignore the topic of long-term care insurance because:

  • You might already be unable to buy long-term care insurance. Wakely Consulting Group, an actuarial firm, studied applicants for long-term care insurance in 2003-2004; the findings: 11 percent of applicants in their 50s, 19 percent in their 60s and 43 percent in their 70s were rejected.
  • A Milliman & Robertson actuary estimated that 15 to 25 percent of the over-65 age group are uninsurable for long-term care.
  • A report from the Henry J. Kaiser Foundation indicates that over five million people ages 18-64 need some type of long-term care.
  • The latest data from the National Center for Health Statistics (for 1999) reported that roughly 160,000 of the people living in nursing homes were under age 65 (nearly 10 percent of the total). Of those receiving home health care services, roughly 400,000 were under 65 (about 30 percent of the total).

So, unless you have so little money that you will qualify for Medicaid, or so much money that you can pay the bills out of your own pocket, you should consider buying long-term care insurance.

Source: Insurance Information Institute, “Should I buy long-term care insurance?” http://www.iii.org website. Accessed June 3, 2014. http://www.iii.org/articles/should-i-buy-long-term-care-insurance.html

© Copyright 2014. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Will I Need Long-Term Care?

Health-Wellness_DocPatientComputerIf you’re under 55, it’s unlikely. Even over 55, only a small percentage of the population will need long-term care before they are in their 70s or 80s.

However, according to research published in the journal Inquiry by Kemper, Komisar, and Alecxih, most people who turn 65 in 2005 will, in their lifetime, need some level of long-term care.

PEOPLE WHO TURN 65 IN 2005 WHO WILL NEED LONG-TERM CARE

According to research published in the journal Inquiry by Kemper, Komisar, and Alecxih, most people who turn 65 in 2005 will, in their lifetime, need some level of long-term care.

Note that this study defines LTC need as having one or more ADL limitations, four IADL limitations, or using formal LTC services other than post-acute care under Medicare. As such, it indicates somewhat greater usage of LTC services than most long-term care insurance policies would pay for.

Recent trends suggest that 50 percent or more of the people who might have gone into a nursing home for long-term care will in the future go into an assisted living facility. Assisted living facilities generally cost less than nursing homes. For example, in mid-2005, a MetLife Mature Market Institute survey found a national average daily cost of assisted living facilities of $100, with a range from $55 to $155 across the U.S.

The good news is that people are living healthier longer—that, in other words, the need for long-term care is diminishing and, when it occurs, the onset of need for long-term care is, on average, occurring later and later in life and starting closer to death (so that future periods of long-term care needs may be shorter than at present). In part, this is due to the adoption of better prevention strategies and better medical practices. Even so, if you do need long-term care services, they can be expensive.

Source: Insurance Information Institute, “Will I need long-term care?” http://www.iii.org website. Accessed June 3, 2014. http://www.iii.org/articles/will-i-need-long-term-care.html

© Copyright 2014. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.