Recent headlines have talked about the federal long term care insurance option through the so-called Class Act. Kathleen Sebelius, the US Secretary of Health and Human Services, said the federal government can’t provide a Long Term Care benefit that is financially sound.
In making the announcement, Sebelius said in a letter to Congress that “Without insurance coverage or personal wealth to pay large sums (of money) in their later years, more Americans with disabilities will rely on Medicaid (the medical welfare program) once their assets are depleted, putting further strain on state and federal budgets.”
Many people are unaware that health insurance and Medicare (health insurance for those 65 and older) don’t pay for most Long Term Care services. This places the burden of caregiving to the family or the family’s back pocket. With November being National Long Term Care Awareness month, developing a plan for Long Term Care is essential to everyone’s retirement planning. Understanding the government can only provide for those who have no assets makes this even more important to have a plan in place long before retirement. Affordable Long Term Care Insurance is the answer for many Americans who want to address the physical, emotional and financial burdens that a Long Term Care event can create on a family.
Terry Savage, columnist for the Chicago Sun-Times and nationally known expert on personal finance, author and regular radio & television commentator on issues related to investing and financial markets has said, “The cost of long-term custodial care is the most devastating thing that could happen to your retirement plans — even worse than a bear market. Yet it is the thing we least want to think about. And boomers haven’t been forced to confront this reality, because our parents are living longer, with new hips, knees and heart valves. But eventually, we will all wear out!”
When we talk about Long Term Care we are talking about two types of issues. Although some Long Term Care is “skilled” nursing home care after a period of hospitalization (some of which is covered on a limited basis by health insurance and Medicare) most Long Term Care is custodial in nature. This means a person needs help doing basic everyday living activities. Otherwise known as “ADL’s” these include such activities as bathing, dressing, feeding, and toileting. According to the MetLife Mature Market Institute the national average daily rate for a nursing home is $239 a day … over $87,000 a year. Assisted Living yearly cost in 2011 averaged almost $42,00 a year and homecare, which most people would prefer, can run about $40,000 a year based on a 5 to 6 hour a day homecare schedule. This is expensive even for the well-to-do.
The national 3in4 Need More campaign (www.3in4needmore.com) is a non-profit organization working with industry, government and community groups to spread awareness for the need for Long Term Care planning. They say that 3 in 4 people need to know more. Prudential Financial Inc. notes that 74% of consumers ages 55 to 65 polled for a recent survey said they are concerned about needing some kind of Long Term Care. That’s about three in every four of us! But the consumer concern has not yet been translated into action in most cases. In the Prudential survey, 25% of all consumers admitted that they have no idea what a day in a nursing home costs. And only 22% of the participants mentioned the idea of using private LTC insurance to pay for care. (Prudential Financial Inc. Newark, N.J. 2010 Long Term Care Cost Study).
The fact is the advances in medical science allow us to survive accidents and major illness more now than ever before. The end result … we live longer and we survive health events. Unfortunately the end result is the need for help with everyday living activities and, as we age, we need supervision due to memory issues.
According to the U.S. Department of Health and Human Services, “At least 70 percent of people over age 65 will require some long-term care services at some in their lives,” (HHS/www.longtermcare.gov). Think that long term care is just for elderly people? Think again. Young men and women also need long term care for a variety of reasons including accidents, multiple sclerosis, strokes or other debilitating conditions. 40% of the people receiving long term care are working age adults between the ages of 18 and 64. (Georgetown University Long-Term Care Financing Project. “Long-Term Care Financing Policy Options for the Future,” June 2007.)
Sure, there may be more exciting things to think about, however during times where protecting your hard earned assets and your future or current retirement is more important than ever before, making plans for the biggest involuntary risk we face is something you should investigate. While Long Term Care insurance is a very affordable way to plan, it isn’t for everyone. You might not qualify due to health. You might be too old for this product as well. A Long Term Care Specialist can help guide you and answer your questions. It doesn’t hurt to learn and do so when you are younger and healthy and premiums are very affordable.
Try the American Association for Long Term Care Insurance, http://www.aaltci.org/. It has a tremendous amount of information, including information on the federal/state partnership program for each state, tax incentive information, cost of care and much more. You can also get information visiting my website, http://www.mccannltc.com. You can also get free quotes from all the top insurance companies at http://www.radioltc.com.
It is the holiday season. Time to get the peace of mind knowing that at least this risk is planned for and you don’t have to worry about the physical, emotional and financial burdens Long Term Care places on family.