The average individual turning 65 has nearly a 70% chance of needing long-term care in some capacity as he or she ages, according to the Administration for Community Living (ACL) and the Administration on Aging (AoA). That, combined with higher rates of longevity, means you or someone you know will likely use a skilled nursing or assisted living facility one day. However, they are quite costly, and funding can be difficult to get. Consider working with a financial advisor as you consider your long-term care needs in your financial plans.
Who Needs Long-Term Care?
Of course, every person is different. So, you can’t predict who will benefit from it and what type of care they’ll need. It requires ongoing assessment. However, some things can increase the risk of needing care. It includes factors like:
- Health and family history
- Marital status
Generally, people require long-term care when they have a disability or serious health condition. While that means some long-term care provides for people of varying ages, most have older residents. As they age, they need help with everyday living, and their disability or illness gets worse.
What Do Long-Term Care Facilities Offer?
Long-term care has a strong association with seniors. So, you’re not alone if you thought it was only for the elderly. But long-term care actually supports a variety of people, in different age groups, with a wide range of needs. A long-term care facility is designed to provide for people’s health or personal well-being. They often host rehabilitative, medical or nursing care for the patients, along with structured activities.
The most common form tends to be personal care – where residents receive help with everyday tasks, such as dressing or eating. But they can also support those who want to maintain their independence. Some host individuals who live there year-round, such as a nursing home, while others are only temporary, like an adult day care center.
Types of Long-Term Care Facilitates
Knowing the array of facilities available can help you find the right one for you or your loved one.
Assisted Living Community
When someone lives in an assisted living facility, they receive 24-hour supervision. So, residents have access to meals, help with daily activities and healthcare services in a comfortable, home-like environment. Caregivers may assist with things like bathing, eating, housekeeping, taking medication, dressing and transportation.
Assisted living facilities also create opportunities for recreational activities.
Those living with Alzheimer’s or other types of dementia likely need more care as they age. There are various housing options for these individuals, depending on their level of need. In this case, the facility provides 24-hour support. Residents live in semi-private apartments, and the care facility staff are in charge of structuring the person’s day with activities. They also have to monitor their safety and wellbeing.
Usually, assisted living facilities perform this type of care. However, you may also find it in nursing homes as well as personal care homes.
Independent Living Community
The continuing care retirement community (CCRC) is one of the most common forms of an independent living community. They offer three stages of care: skilled nursing, assisted living and independent living. This allows flexibility as a resident’s needs change with time.
Generally, a community may offer private apartments or fully equipped homes, making it easy for seniors to retain their independence. The CCRC may also plan out community activities for their residents.
This is probably the most familiar type of long-term care facility. They support individuals who need consistent nursing care and who struggle with activities of daily living. In particular, they help those who can no longer live independently. Nursing homes are also viable options for anyone who cannot be cared for in their own home or a loved one’s home.
The facility gives its residents access to vital nursing care, like rehabilitation, and recreational activities. They usually share a room and eat in a dining area. Stays may be temporary, otherwise known as respite care, or long-term.
Residential Care Home
These are private homes that serve a collective of residents at one time from live-in caretakers. As a result, they cater to those looking for something private with a home-like atmosphere. They still receive help with daily activities, but the range of nursing services and amenities depends on the home.
Skilled Nursing Facility (SNF)
A skilled nursing facility (SNF) caters to inpatients who need medical assistance. It helps seniors during both long-term and short-term rehabilitation, along with 24-hour medical support. Patients require this level of care after a qualifying hospital stay for surgery, injury or illness.
An SNF employs a variety of medical professionals, from speech-language pathologists to registered nurses (RNs) to physical therapists. This type of facility is vital to post-discharge care for elderly patients, ensuring they begin a healthy recovery process before returning home. Most patients’ insurance covers their short-term stays, and Medicare beneficiaries receive up to 100 days covered.
Paying for Long-Term Care Facilities
Based on Genworth’s Cost of Care Survey tool, the annual median cost for a private room in a nursing home is over $100,000. And both a home health aide and an assisted living facility incur over $50,000 in expenses. These rates, which were already high, have climbed considerably within recent years. Exacerbated by the COVID-19 pandemic, the 17th annual Genworth Cost of Care Survey reported the following increases in 2020:
- Assisted living facility: 6.15%
- Homemaker services: 4.44%
- Home health aide: 4.35%
- Semi-private room in a nursing facility: 3.24%
- Private room in a nursing facility: 3.57%
All of them outpaced the 2020 rate of inflation. So, with that in mind and no decrease in sight, you need ways to plan for this potential future expense. Here are some options worth considering:
Buy a Long-Term Care Insurance Policy
Long-term care often falls outside regular health insurance. Because of that, it may be worth your while to investigate your long-term care insurance policy options. They can help you cover the cost of care when you have a debilitating disorder or illness.
So, your policy would reimburse you for assistance with activities of daily living (ADL), whether in your home, an assisted living facility, an adult day care center or a nursing home. By purchasing it, you limit emotional and financial stress on your loved ones and ensure the right person receives proper care.
But it’s expensive. One sample of pricing comes from the American Association for Long-Term Care Insurance’s 2020 price index survey. According to the survey, the average annual premium for a healthy male over 55 is $1,700. That covers $164,000 in benefits. For a woman in the same situation, it costs an average of $2,675 annually. Both experience benefit growth at 3% annually.
You don’t want to start planning when you’re already in need. Instead, take advantage of the time when you’re young to start researching. Most people don’t want to end up in a nursing home, but forward thinking can ensure you’re well taken care of.
For example, you may want to take stock of your own health and personal situation. Do you have any pre-existing conditions? Has anyone in your family had a degenerative disease, like Alzheimer’s? Answering yes to either of these can shape the type of care you may want to prepare for.
Alternatively, you might need to think about the financial side of things. A well-crafted insurance policy can help you shoulder eventual costs. Growing enough in savings will also help you fund your long-term care as well as any other unexpected medical costs.
Explore Your Options
Long-term care may suit some. But not everyone will be eligible for coverage or pay the same rates. Several factors go into your overall cost, including age, benefit amount and duration, types of care, location and health. Certain pre-existing conditions can also make insurance more expensive or almost impossible to qualify for. Some of them include:
- Cystic Fibrosis
- Muscular Dystrophy
- Parkinson’s Disease
There are other options available to you in that case. For example, a health savings account (HSA) is designed to store funds for healthcare expenses. You can also look at:
- An annuity with a long-term care rider
- A deferred lifetime annuity
- Life insurance with a long-term care rider
Remember that each insurer is different. In turn, you’ll likely run into varying approval criteria.
Talk to Family
Many families are uncomfortable with the idea of long-term care and assistance. They prefer to take care of the loved one themselves and keep things private. While that’s admirable, the family may not always be the best choice for giving care. Professionals exist for a reason, and this type of work is difficult. A relative may find the role too financially and emotionally draining.
So, speak with your loved ones about future plans. Be honest about what the responsibility would include. That way, everyone has a voice and feels prepared.
Qualify for Medicaid
Medicare falls under the category of an “entitlement program.” It’s for anyone over 65, or under if you have a disability. While it provides hospital and medical expense benefits, it doesn’t cover long-term care, which includes services like nursing homes. That puts 100% of the cost on you.
By contrast, Medicaid counts as a public assistance program that requires you to fall within one of its eligibility groups. Generally, it’s for low-income groups, pregnant women, families with children, the elderly and people with disabilities (although rules vary by state). Unlike Medicare, Medicaid pays for long-term care. You must deplete your resources to qualify. Be sure to investigate the quality of care it would afford before, though.
Talk to a Professional
Tackling your own future may make you feel like you’re walking in the dark. If you’re struggling to decide, talk with a trusted professional. A consult with a financial planner can help you pinpoint the right products to support your future. In particular, someone who specializes in long-term care planning will be the most help. They’ll have the right knowledge to help you make an informed choice.
Create a Retirement Plan and Budget
You won’t know the amount you’ll need to fund long-term care until you review your savings. You can also use a retirement calculator to help you see if you’re on track to save enough.
If you don’t have a retirement plan yet, it’s time to start thinking about one. A well-formed strategy can make all the difference in your lifestyle during retirement. On the other hand, if you know how much you need to save, then the next step is budgeting. You may need to reevaluate how much you’re putting away regularly to account for your potential long-term care costs.
One day, you or your loved one may need long-term care. That’s why it’s so important to understand how it works. There are various services out there, whether you need temporary rehabilitation or a permanent home. By researching your options ahead of time, you can avoid any financial surprises.
Long-Term Care Tips
- Approaching your senior years can be stressful. But with the right guidance, you can avoid costly mistakes and create a strategy suiting your needs. Financial advisors who specialize in planning for long-term care can help you do that. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Anticipating your future financial needs will help you take care of yourself in the long run. If you need help gauging your funds, try SmartAsset’s savings calculator. It can help you track how well you’re doing and whether you need to readjust your strategy to meet your goals.
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