As millions of baby boomers in the United States rapidly approach old age, experts predict the number of long-term care patients will double over the next few decades. If you do not have a long-term care plan in place, you and your family may face difficult choices down the road.
A booming generation
Between 1946 and 1964 the United States experienced an unprecedented baby boom, producing more than 76 million births in an 18-year span. That generation represents a large share of the population and will affect demand for health and long-term care services as it ages.
By midcentury the youngest surviving baby boomers will be in their mid-80s, which will raise the population of people 85 and over significantly. Because many people need some form of long-term care by that age, demand on the long-term care system is expected to increase substantially.
On top of that, Americans are living longer lives on average, which raises the probability of needing long-term care late in life. For most households, planning ahead is the best way to manage this risk.
The hefty price tag
If you or a loved one requires long-term care, be prepared for high costs. A year in a nursing home can range widely depending on location and level of care, and long-term care expenses often run tens of thousands of dollars annually.
Average costs
- $5,566 a month for a semi-private nursing home room
- $6,266 a month for a private nursing home room
- $2,968 a month for care in an assisted living unit
- $19 per hour for a home health aide
These costs can quickly erode savings. For example, hiring a home aide three times a week for four hours at $19 an hour would cost about $228 a week, or nearly $12,000 a year. Medicare generally does not cover ongoing long-term care costs, so most families must plan for these expenses independently.
Informal home care from family members is not realistic for many households because adult children often balance jobs and their own family responsibilities.
The simple solution
One common way to protect against the high cost of long-term care is long-term care insurance (LTCI). LTCI policies can cover services such as nursing home care, assisted living, and home health aides, helping protect your savings and your standard of living if you or a spouse needs extended care.
Some options include simplified underwriting or guaranteed-issue features; learn more at Guaranteed-Issue and Long-Term Care.
Even the affluent need coverage
Even households with substantial assets can face hidden costs from a long-term care event, including inflation, taxes when selling appreciated assets, and lost investment opportunities. These factors can make self-insuring more expensive than it first appears.
When you factor in inflation and other indirect costs, buying protection can be a sensible part of retirement planning for many families.
Gain peace of mind with LTCI
Without LTCI, a nursing home stay or long-term home care could reduce your savings significantly and place emotional and financial strain on your family. To explore plan options and how they might fit your situation, many agents and advisors use industry resources, for example Long Term Care Insurance for P&C Agents.
To compare related products or see other specialized plans, you can also review Needlestick/Sharps Plan for an example of how different coverages are presented by carriers.
If you want to discuss your long-term care insurance options, talk to an agent who can evaluate your situation and help customize an effective plan.
Frequently Asked Questions
When should I buy long-term care insurance?
Many experts recommend buying LTCI in your 50s or early 60s, when premiums are lower and you are more likely to qualify medically, but the right timing depends on health, finances, and family history.
Does Medicare cover long-term care?
Medicare generally does not cover long-term custodial care such as extended nursing home stays or ongoing home health aide services; it mainly covers short-term rehabilitative care under specific conditions.
How much coverage do I need?
Coverage needs depend on expected care settings, family support, assets, and how long you want benefits to last; an agent can help estimate a suitable benefit period and daily or monthly benefit amount.