Your Best Long-Term Care Financial Planning Options

The aging of America brings certain challenges

The U.S. Department of Health and Human Services reports that almost 70% of people over age 65 are expected to need long-term-care services at some point in their lives.

While it’s difficult to predict what type of care a person might need or how long they will need it, statistics reveal women's need for care is averaging longer at 3.7 years to men's 2.2 years. 20% will need care for more than five years. Women are living longer than men: the average life expectancy for women is 79 years, and for men it's 72 years. 

The cost of aging and long-term care

• The national average cost for assisted living centers—single occupancy—is $48,000 a year. The average cost of a skilled care facility—again, single occupancy in a nursing home—is much higher at $100,375 a year.
• In Wisconsin, the average monthly cost of home healthcare is $5,720. It is higher than the national average, but the state does provide program assistance.

More and more people are expected to reach an age where they are likely to need some type of assistance with their own daily living activities. Activities of daily living include bathing, dressing, toileting, transferring, eating and continence. Another general care trigger is cognitive impairment. 

This custodial care is different from medical care because it generally helps you to live as you live now instead of improving or correcting medical problems. Medicare does cover some skilled nursing home care but under very tight restrictions and only for a very limited amount of time. People often think of long-term care as strictly nursing home care, but this care can be given in your own home, an adult day care facility, assisted living facility, nursing home or hospice facility.

What are your long-term care financial planning options?

There are many choices; however, your primary choices are between self-insuring or purchasing long-term-care insurance.

• The self-insure option involves depending on personal savings and investments to fund any long-term-care needs. This would give you complete flexibility but requires that you be prepared for the potential expense.
• The other option is to transfer the financial risk of long-term care to an insurance company through long-term-care insurance. A long-term care policy can cover all levels of care, from skilled care to custodial care to in-home assistance. Many find it to be an appropriate way to protect themselves and their loved ones from the potentially devastating cost of long-term care. Finding the right long-term care financial planning option today will help secure your needs for tomorrow.