Long-Term Care Insurance: The Rising Cost of Care

It’s that time of year again. Holidays, family meals, presents and Long-Term Care Awareness Month. That’s right. November is Long-Term Care Awareness Month. Long-term care, and particularly long-term care insurance, is one of the most important components of a person’s financial portfolio, and yet it is one of the most commonly overlooked. Long-term care is something we only associated with the elderly and is typically pushed to the back of our minds until faced with the difficult decisions surrounding the care of a loved one. But, when we say there is ‘no time like the present’ when it comes to this particular type of coverage, we mean it.

So, what is Long-term care? Long-term care, according to the U.S. Department of Health & Human Resources, involves a variety of services designed to meet a person's health or personal care needs during a short or long period of time.¹ Long-term care is defined as the medical or non-medical support needed by an individual for an extended time. To that point, long-term care insurance helps to mediate the cost of those care needs so that the insured can continue to live their life as they had been.

To get an idea of how common the need for care is, consider the current aging population. Until the year 2030, 10,000 Baby Boomers will turn 65 every day, and 7 out of 10 will need some form of long-term care.² It is also important to note that, while long-term care may be associated primarily with 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.

Long-term care is important in order to keep those care costs from becoming a burden, but it is just as important to manage that coverage. Managing how much coverage you will need as you age, similar to managing how much life insurance coverage you need, may increase the upfront cost to you month by month, but will benefit you greatly in the long run.

According to the 2019 Genworth Cost of Care Survey, the national average annual cost of having a home health aide is currently $52,624.³ This is a 4.55% change in cost since 2018. Similarly, the current average annual cost of a private room in a nursing home facility is a staggering $102,200, which is a 1.82% chance from just last year.³ Genworth predicts that in just ten years the annual average cost of a home health aide will increase to $70,722 and the cost of a private room in a nursing home facility will go up to $137,348.³

The aforementioned figures 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. Long-term care insurance is not "nursing home" coverage but insurance that helps assure to a policyholder, and their loved ones, of continued independence as they age without exhausting their personal assets.

Ready to have the conversation about Long-Term Care Insurance? Want to learn more about your options? Call the New York State Bar Association Insurance Program at 1-800-727-7770 or visit online.

 

References

1. What Is Long-Term Care? (n.d.). U.S. Department of Health and Human Services: National Institute on Aging. Retrieved November 7, 2019, from https://www.nia.nih.gov/health/what-long-term-care.
2. How Much Care Will You Need? (2019). U.S. Department of Health and Human Services. Retrieved August 28, 2019, from https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html.
3. Cost of Care: 2019 Cost of Care Report. (2019, August 26). Genworth. Retrieved November 7, 2019, from https://www.genworth.com/aging-and-you/finances/cost-of-care.html.