As a soon-to-be retired grandparent, who lives paycheck to paycheck and has no retirement savings, one of the things that keeps me up at night is the concept of paying for long term health care if I need it. There’s insurance for that, but I can barely afford my health insurance, let alone look to any future issues. So, like many of you, I am facing the possibility of long term health costs, and not being able to pay for them. And of course, I need to research what to do!
So, my first and most important question is, what does long term health care cost? I did some research, and I wanted to share with you what I have found, so hopefully you won’t be up at night either. Here’s what I came up with.
Facts About Long Term Health Care
- The possibility of needing nursing care – and not being able to pay for it – is one of the worst fear Americans have about aging.
- The prevalence of cognitive impairment among the aging population shot up over the last decade, while prevalence of physical impairment in the same group remained the same.
- Federal data suggests that the lifetime probability of becoming disabled in at least two activities of daily living or of being cognitively impaired is 68% for Americans aged 65 and older.
- There’s no comprehensive national policy to take care of the money gobbler that is long term care.
- By 2050, the number of Americans in need of paid long term care services in any facility (at home, residential care, skilled nursing centers, etc.) will likely double from the 13 million users recorded in 2000, to about 27 million people.
NOTE: Medicare and Medigap insurance does not cover “maintenance” items such as assistance with activities of daily living such as bathing, dressing, or eating.
This information is from https://ltcbook.com/
What Is Long Term Health Care and Why Do We Need It?
Individuals who require long-term care are generally not sick in the traditional sense but are unable to perform two of the six activities of daily living such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking.
Age is not a determining factor in needing long-term care. About 70 percent of individuals over 65 will require at least some type of long-term care services during their lifetime. About 40% of those receiving long-term care today are between 18 and 64. Once a change of health occurs, long-term care insurance may not be available.
Long-term care is an issue because people are living longer. As people age, many times they need help with everyday activities of daily living or require supervision due to severe cognitive impairment. That impacts women even more since they often live longer than men and, by default, become caregivers to others.
This information is from Wikipedia
What Does Long Term Nursing Care Cost
Below are some national average costs for long-term care in the United States:
- $225 a day or $6,844 per month for a semi-private room in a nursing home
- $253 a day or $7,698 per month for a private room in a nursing home
- $119 a day or $3,628 per month for care in an assisted living facility (for a one-bedroom unit)
- $20.50 an hour for a health aide
- $20 an hour for homemaker services
- $68 per day for services in an adult day health care center
The cost of long-term care depends on the type and duration of care you need, the provider you use, and where you live. Costs can be affected by certain factors, such as:
- Time of day. Home health and home care services, provided in two-to-four-hour blocks of time referred to as “visits,” are generally more expensive in the evening, on weekends, and on holidays
- Extra charges for services provided beyond the basic room, food and housekeeping charges at facilities, although some may have “all inclusive” fees.
- Variable rates in some community programs, such as adult day service, are provided at a per-day rate, but can be more based on extra events and activities
These costs are from https://longtermcare.acl.gov/costs-how-to-pay/costs-of-care.html
What is Long Term Care Health Insurance
According to Wikipedia, Long-term care insurance (LTC or LTCI) is an insurance product, sold in the United States, United Kingdom and Canada that helps pay for the costs associated with long-term care. Long-term care insurance covers care generally not covered by health insurance or Medicare.
Care includes help with dressing, bathing, eating, toileting, continence, and getting around in your home or living facility. It may also include rudimentary medical care such as administering daily medications and cognition checks.
Long-term care insurance policies reimburse policyholders a daily amount (up to a pre-selected limit) for services to assist them with activities of daily living such as bathing, dressing, or eating. You can select a range of care options and benefits that allow you to get the services you need, where you need them.
What Does Long Term Health Care Insurance Cost?
The cost of your long-term care policy is based on:
- How old you are when you buy the policy
- The maximum amount that a policy will pay per day
- The maximum number of days (years) that a policy will pay
- The maximum amount per day times the number of days determines the lifetime maximum amount that the policy will pay.
- Any optional benefits you choose, such as benefits that increase with inflation
Here are some average costs of long term health care insurance. Rates can vary a lot, depending on the company you are working with, the area in which you live, and your state of health. So shop around!
Long Term Care Insurance Rates for Single Age 55
Average Cost: $2,007-per-year *
Low Cost: $1,764
High Cost: $3,446
* Average Cost (with preferred health discount): $1,720-per-year
Age 55, standard health rate. Initial policy benefit for EACH is $164,000 based on a Daily benefit of $150 and 3 year benefit period. Coverage value will increase annually because a 3 percent compound inflation growth option was included.
Long Term Care Insurance Rates for Couple Both Age 55
Average Cost: $2,466-per-year (combined)
Low Cost: $2,080
High Cost: $4,824
Both individuals are age 55, standard health rate. Initial policy benefit for EACH is $164,000 based on a Daily benefit of $150 and 3 year benefit period. Coverage value will increase annually because a 3 percent compound inflation growth option was included.
Long Term Care Insurance Rates for Couple Both Age 60
Average Cost: $3,381-per-year (combined)
Low Cost: $2,794
High Cost: $5,637
Both individuals are age 60, standard health rate. Initial policy benefit for EACH is $164,000 based on a Daily benefit of $150 and 3 year benefit period. Coverage value will increase annually because a 3 percent compound inflation growth option was included.
These rates are from http://www.aaltci.org/long-term-care-insurance-rates/
Which Is More Expensive, Home Care or Facility Care?
- Home Care Aide Cost: $20 per hour or $160 per day
- Assisted Living Cost: $119 per day, approximately $43,000 a year
- Skilled Nursing Home Cost: $220 per day, approximately $80,000 a year
Cost might not be the only factor. It all depends on what shape you are in, and what your needs are. Cognitively compromised individuals may need to remain in their homes for the familiarity, whereas someone with a heart condition may need skilled care close by.
This information is afrom https://www.senioradvisor.com/blog/2015/08/home-care-vs-nursing-home/
How Do People Pay For Long Term Care If They Don’t Have Insurance?
1. Add a rider to your life insurance. In some cases you can use funds that would be paid out at your passing for long term care. Check with your life insurance provider.
2. Use your HSA (Health Savings Account). You can put up to $4450 in your HSA tax free, if you are over the age of 55. This works well for those who can afford insurance, but don’t qualify due to their current health conditions or other factors.
3. Medicaid will cover long term health care costs. However, they expect you to exhaust all other forms of payment. Typically seniors can’t have more than $2000 of liquid assets to have Medicaid pay for long term care. Also, you don’t get to choose where you live, and staying in your home and getting home care is totally out of the question. I know of a family that has this issue. The dad had a stroke at age 48, and has been in long term care for over 10 years. The family had to liquidate everything. It was a very difficult situation for their only son. They are now deeply in dept due to this, and will likely lose their home eventually. But Medicaid is paying for the dad’s care, so that’s the good thing in this horrible situation.
4. Rely on a loved one to take care of you. This doesn’t go over very well, especially if you have not discussed your plan with the loved one in question. Some people have no problem placing their health care onto one of their children or grandchildren. I for one, feel obligated NOT to force my kids to take care of me. It’s totally not fair.
5. You can personally fund your long term care with your savings. While it is impossible to know how much money you will need, a 2015 study published by the U.S. Department of Health and Human Services found most people need less than two years of long-term care services and setting aside $70,000 may be enough to meet average costs.
How To Fund Long Term Care Yourself
I don’t know about you, but as a retiring grandparent, I don’t and likely won’t have $70K lying around to fund my long term care. But I do have one thing that is going to help me with those costs, and many others.
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In Conclusion
It is a really scary prospect, getting old and not being able to afford care for yourself, and being a burden to your loved ones. But with planning and a little hard work, you can avoid laying awake at night and worrying about this aspect of being a grandparent retiree. Put in place a solution NOW, to put that issue to rest, and get some rest yourself.
Put your comments and questions below, and thank you for reading!
References
My mother is getting to the age now where myself and my brothers and sister have to keep checking in on her regularly as she lives alone but we can’t all get there every day but the last thing I would want to do is roughly put her into some sort of accommodation for the elderly
The prices of long term health care seem really expensive but I’m from the UK so I don’t know if it would be the same over here, do you know anything about UK health care for the elderly?
Hi Matthew, thanks for commenting. I really don’t know about long term health care in the UK. I did a search and found this article,
http://www.ancien-longtermcare.eu/sites/default/files/ENEPRI _ANCIEN_ RRNo 74England.pdf
This is about the long term care system in England. You can probably start there, and learn what to search as you read.
I know that here in the US, you can get a trusted care giver at:
https://www.care.com/
Perhaps the UK has a program like this. I hope this helps, and thanks again for reading and commmenting. Rhonda