This coming June 17th marks 2018’s Father’s Day- a national holiday to celebrate fathers and their contributions to their families. These occasions also provide a time of reflection on family and how to better plan for the future in order to protect yourself and them financially. A part of that planning process should include evaluating your long-term care insurance needs.
What is long-term care insurance and why is it important? As people age, the need for added support or services to carry out either personal or health related tasks can arise. Long-term care is defined as the medical or non-medical support needed by an individual for an extended time. Long-term care insurance is not "nursing home" coverage but insurance that helps assure to a policy holder, and their loved ones, of continued independence as they age without exhausting their personal assets. Wondering if this coverage is relevant for you and your family? While most consider long-term care as a need just for senior citizens, approximately 40% of patients receiving long-term care are actually under age 651. While the majority of long-term care patients are seniors, this prolonged care is for any individual who suffers from an illness, accident or disability that requires them to have some form of regular medical care.
There is a burgeoning number of rising seniors across the nation, which is cause for concern regarding the accessibility and affordability of long-term care. The 2017 survey, conducted by Associated Press NORC Center for Public Affairs Research, has concluded that two-thirds of Americans aged 40+ “feel the country is not prepared for the rapid growth of the older adult population.”2 However, 67% of responders say that they have done little to no planning at all for their own care.2
According to the U.S. Department of Health and Human Services’ 2015 (revised 2016) study3 , approximately 52% of Americans turning 65-years-old today will incur a disability requiring some form of long-term care. These figures all underscore the importance of getting a jump start on planning ahead financially to avoid or minimize trouble finding and/or affording care in the future.
Why long-term care insurance? Long-term care is expensive and often not covered by insurance. Care costs vary depending on the patient’s state of residence. According to Genworth 2017 Cost of Care Survey, the national average cost for a private room in a nursing home is $97,4554 annually. The estimated annual salary for an in-home health aide is approximately $49,192 per year. Medicare does not cover long-term care services and Medicaid will provide such care services only for eligible individuals who meet certain financial and medical criteria. The cost of care, or having to provide care themselves, can become a burden to not only the patient but to their loved ones as well.
The cost of insurance premiums may often be a primary reason someone did not buy an LTC policy. However, this risk has the potential to cost approximately $300,000 per year per person4 depending on the type of care provided. While long-term care insurance coverage may not be affordable for everyone, it can save thousands of dollars for policy holders and the loved ones who would have to otherwise bear the cost of care. There are essentially four major components that make up a long-term care insurance policy. Each piece collectively determines the cost and each can be changed to fit the needs of the policy holder. These components are:
- Your daily or monthly maximum benefit.
- Lifetime maximum – stated in a number of years.
- Elimination Period.
- Inflation protection.
As previously mentioned, it is important to keep in mind that long-term care insurance is not necessarily affordable for everyone. However, it is often less expensive than many may assume. Additionally, there are ways to minimize premiums and/or take advantage of discounts offered through membership with various associations. For example, organizations like the New York State Bar Association, alumni associations or other professional groups may offer discounts on coverage as a member benefit. Start the conversation with an NYSBA Insurance representative by calling 1-855-874-0813. Or, for additional information about long-term care insurance, visit the NYSBA Insurance website here.
- Genworth 2015 Cost of Care Survey. April 2015. Retrieved June 10, 2017, from https://www.genworth.com/dam/Americas/US/PDFs/Consumer/corporate/130568_040115_gnw.pdf
- Long-Term Care in America: Views on Who Should Bear the Responsibilities and Costs of Care. (2017). Retrieved June 12, 2018, fromhttp://www.longtermcarepoll.org/Pages/Polls/Long-Term-Care-in-America-Views-on-Who-Should-Bear-the-Responsibilities-and-Costs-of-Care.aspx
- Long-Term Services and Supports for Older Americans: Risks and Financing Research Brief. ASPE. July 1, 2015. Retrieved June 9, 2018, fromhttps://aspe.hhs.gov/basic-report/long-term-services-and-supports-older-americans-risks-and-financing-research-brief
- Genworth 2017 Cost of Care Survey, conducted by CareScout®, June 2017, Retrieved June 12, 2018, from https://www.genworth.com/aging-and-you/finances/cost-of-care.html