When it comes to aging and long-term care, many people don’t bother with advance care planning. Most of them don’t even know what long-term care is until they or their loved ones need it.
However, if you wait to make a plan in advance, you might end up with financial troubles, as long-term care can be quite expensive.
This comprehensive guide will help you learn all about it, including different long-term care services, facilities, costs, and payment options.
What is Long-Term Care?
Long-term care (LTC) refers to various medical and non-medical services for helping the elderly who can’t take care of themselves for extended periods due to a chronic illness or disability.
For instance, someone who has suffered a stroke or developed a cognitive impairment like dementia or Alzheimer’s disease needs proper long-term care to recuperate or receive the necessary support.
More often than not, family members and friends provide this type of care, as long as their loved one doesn’t need medical services. They can help their loved ones eat, dress, bathe, groom, move around, use the toilet, take the necessary medication, etc.
Others hire professional caregivers for at-home care, while some move their loved ones into a long-term care facility that offers medical and non-medical services round the clock. Oftentimes that’s where people who need it, can get the best care and support. A good long term disability insurance can solve many problems.
Who Needs It?
The Administration for Community Living (ACL) found that nearly 70% of people aged 65 or older will need some kind of long-term care, with 20% of them more likely to need it for longer than five years.
The key factors that affect who might need LTC services include:
- Age– The older a person is, the more likely it is that they’ll need LTC services. People become weaker and more frail as they age, become more at-risk of falling, serious injuries, critical illnesses, and other health problems.
- Gender– The ACL found that women need more care than men, with an average of 3.7 years and 2.2 years, respectively. And sincewomen tend to live longer than men, they’re more likely to need long-term care.
- Health– Suffering from a chronic illness or disease that makes a person unable to eat, dress, bathe, and perform other activities on their own is another reason to get long-term care. If people can’t take care of themselves due to a disability resulting from an injury or illness, LTC services are the best way to go. Those with a family history of certain illnesses or health conditions are more at risk of needing long-term care.
- Lifestyle– People with unhealthy lifestyle choices, such as a poor diet, lack of physical activity, drinking, and smoking, are more at risk of serious health problems as they age.
- Living arrangements– People who live alone are more likely to need long-term care services, especially those with no loved ones around.
Importance of Long-Term Care Planning
You or your family members may never need long-term care services, but planning for the possibility will help you make smart decisions. An unexpected illness or injury could turn your world around, potentially leading to chronic stress and financial troubles.
A recent AARP study found that over three-quarters (78%) of family caregivers spend an average of $7,242 per year on out-of-pocket caregiving costs. On average, they spend 26% of their annual income on caregiving expenses.
With a proper plan in place, you can bring your or your family’s out-of-pocket expenses to a minimum. Planning upfront will help you make smart financial decisions and choose the right aging and long-term care facility or at-home services.
Furthermore, LTC planning will help you avoid the so-called caregiver stress syndrome. It’s a condition that affects many people who care for an ill, injured, or disabled loved one. It refers to physical, mental, and emotional exhaustion resulting from neglecting their own health.
If you don’t plan for aging and long-term care, you put yourself or your loved ones at risk of becoming overwhelmed, stressed, burned out, anxious, and even depressed. Such chronic stress can weaken the immune system, increase blood pressure, lead to diabetes, and more.
Also see: Top Benefits Of Long Term Care
Different Long-Term Care Options
There are home-based and facility-based long-term care services. Here are some of the most common options to choose from. Don’t forget to inform yourself on short term disability insurance as well.
In-home care refers to non-medical, hands-off care to help a person live in a healthy and safe environment.
It includes the so-called homemaker services, such as meal preparation, laundry, household chores, transportation, and running errands. It often includes companion services as well, such as reading, games, and other social activities.
In-home care doesn’t require a physician’s order, and caregivers don’t need to be approved by Medicare.
Home Health Aide
Home health aide (HHA) also refers to non-medical services and doesn’t require a physician’s order. However, it includes personal care services on a hands-on basis.
That means a person can receive assistance with various Activities of Daily Living (ADLs), such as dressing, grooming, eating, bathing, toileting, and moving around.
Other activities include meal preparation, laundry, medication management, household chores, money management, grocery shopping, caring for pets, etc.
Caregivers who provide personal care services are:
- HHAs (Home Health Aides);
- PCAs (Personal Care Aides);
- DCAs (Direct Care Aides);
- CNAs (Certified Nursing Assistant/Certified Nurse’s Aide).
Adult Day Health Care
Adult day health care (ADHC) refers to social and support services in a community setting.
Adult day care centers offer personal care, nursing supervision, meals, medication management, transportation, and various social activities for elderly or disabled adults.
Assisted Living Facilities
Assisted living facilities offer health, homemaker, and personal care services for people in a home-like setting.
They’re ideal for those who don’t need 24/7 care but still need some level of assistance. Living in such a social setting helps the elderly improve their mental and emotional health as well.
Nursing homes are residential facilities that provide the most extensive and wide range care in a clinical setting, which makes them perfect for those who need 24/7 assistance.
They offer lodging, personal nursing care services, nursing supervision, medical care, therapy (physical, speech, and occupational), rehabilitation, and more. Their primary caregivers are registered nurses (RNs) and CNAs.
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Paying For Long-Term Care
As discussed earlier, long-term care can be very expensive. Take a look at the latest LTC costs in the United States, as revealed by Statista:
If you or a family member end up needing long-term care due to an unexpected accident, injury, or illness, that could make a huge dent in your or your family’s wallet.
You can’t rely on health insurance, and Medicare comes with certain limitations.
Medicare covers long-term care services only when a person needs rehabilitation or skilled services in a nursing home. Medicare will cover 100% of the cost through day 20 and partial costs through day 100, after which it won’t cover any costs. That makes it a better option for short-term care.
On the other hand, Medicaid covers home-based, community-based, and long-term care services in nursing homes. Eligibility requirements vary by state and may require co-payment fees, but people can generally qualify if they live on a limited income and need assistance with ADLs due to an illness or disability.
Long-Term Care Insurance
Long-term care insurance is one of the best options for paying for long-term care. Almost anyone can take out an LTC insurance policy, but some people with disabilities who already have certain health conditions that interfere with their ability to perform Activities of Daily Living (ADLs), may not be approved, but many other adults with disabilities will be. Once you have a policy in place, the benefits are guaranteed as long as you pay all the premiums.
This insurance pays out if and when a policyholder becomes unable to eat, dress, bathe, move around, and use the bathroom on their own due to an illness or disability, or if they have dementia or other cognitive impairment, and the insurance carrier approves the disbursement of the benefits.
It covers the cost of an assisted living facility, nursing home, adult day health care, or home health aide services.
However, a long-term care policy may not be available to those who:
- Already need help with ADLs;
- Are already using LTC services;
- Already have a form of cognitive impairment like dementia or Alzheimer’s disease;
- Have a progressive degenerative or neurodegenerative disorder like Parkinson’s disease or multiple sclerosis;
- Have metastatic cancer;
- Have AIDS or ARC (AIDS-Related Complex);
- Have had multiple strokes or the first one within the past 1-2 years.
That’s why it’s critical to take out a policy before you or a family member experience any of those health problems, if ever.
Standalone vs. Hybrid LTC Insurance
Traditional, standalone long-term care insurance policies are more affordable than their hybrid counterparts, but their premiums typically increase over time. Still, they offer larger benefit payments than hybrid policies, although they may not cover all the LTC costs.
Both come with the so-called elimination period of 30, 60, or 90 days, during which the policyholder must pay for LTC services out of pocket. Afterward, they provide reimbursement for any necessary care.
A hybrid long-term care insurance policy is a life insurance policy with a long-term care rider. Sometimes it’s more expensive than traditional policies, but it comes with fixed premiums and a guarantee to get the money back. That’s not the case with standalone policies, which won’t pay out unless a policyholder needs long-term care.
Even if you never end up needing long-term care services, your hybrid LTC insurance will return the money to your heirs. If your long-term care exhausts the policy, your heirs will receive a death benefit after you pass on. These advantages are significant.
Factors That Affect the Cost of LTC Insurance
Long-term care insurance costs vary from one insurance provider to the next, but each considers the following factors to determine the rates:
- Age– Younger people typically have lower LTC insurance premiums since they’re typically healthier, relatively speaking. Their risk of health issues increases over age, along with insurance costs.
- Gender– Since women tend to outlive men and are more likely to need long-term care, they typically face higher insurance premiums.
- Health– The more health problems a person has when taking out a policy, the more they’ll pay in premiums.
- Marital status– Married couples usually get lower premiums as many insurance companies offer a discount if each person gets a policy at the same time.
- Policy type– This refers to standalone and hybrid LTC insurance policies, which differ in price, among other things.
- Coverage amount– You can choose the coverage amount you want up to the maximum limit, as the insurer will cap the daily and lifetime payout amount.
Alternatives to Long-Term Care Insurance
If you or your loved one can’t qualify for long-term care insurance, you can consider the alternatives below. There are also several reasons for long term care insurance rejection, so don’t forget them.
Long-Term Care Annuity
A long-term care annuity is a deferred fixed annuity for helping you cover LTC costs once you reach retirement age. If you purchase this kind of contract, you’ll start receiving monthly income at set intervals for the rest of your life once you retire.
You’ll need to pay a lump sum of money upfront to purchase it.
If you already have an annuity contract, you can consider adding a long-term care rider. That’s a special provision that helps cover long-term care expenses.
Critical Illness Insurance
Critical illness insurance (CII) is an excellent option if you or a family member are at risk of a critical illness like cancer, heart attack, or stroke. It provides a lump sum of money after an eligible diagnosis to help cover medical bills and daily living expenses.
CII covers many other serious health conditions, such as end-stage kidney failure, neurodegenerative diseases, paralysis, severe burns, traumatic brain injury, and more.
Critical illness insurance comes with many exceptions and stipulations, so be sure to read up on it to decide if it’s the right fit for you or your loved one’s needs.
Aging and long-term care often go hand in hand. While you or your family members may never need long-term care services, it’s wise to make a sound plan in advance.
That way, you’ll be well prepared for any unexpected illness or disability that might come your way.
You can ensure that you or your loved ones receive the proper care if the need ever arises while protecting your personal finances.