Most people reading this will live to celebrate a 78th birthday, but with this increase in lifespan comes a downside. Many are going to require help with everyday tasks like bathing, dressing or grocery shopping and they will not have planned for it.
Assistance in carrying out daily life activities is not covered by Medicare, conventional health insurance or disability insurance. It falls under the umbrella of long-term care. Most people do not have the savings to pay for this kind of support, even if they are among those fortunate enough to still have pensions or defined benefit plans.
How likely are you to need long-term care?
Research compiled by the U.S. Department of Health and Human Services finds that most people turning 65 will use some form of long-term care during their lives.
Factors that make this likely include:
- Age: As you grow older, you are more likely to need long-term care.
- Living Arrangements: If you live alone, you are more likely to need paid care.
- Gender: Women outlive men by about five years on average, so they are more likely to live at home alone when they are older.
- Disability: Eight percent of people between ages 40 and 50 have a disability. Sixty-nine percent of people age 90 or more have a disability.
- Health Status: If you have a chronic condition such as diabetes or high blood pressure or if they run in your family, it is more likely that you will need long-term care. Poor diet and exercise habits also increase your chances of needing long-term care.
What does long-term care insurance cover?
Most long-term care involves providing support for carrying out activities of daily living (ADLs). Nobody likes to think they might need help getting in and out of a bathtub, buttoning a shirt, opening a can of soup or taking out the trash, but with longevity, the odds are good they will confront at least one of these scenarios. Long-term care insurance can help preserve the ability to live independently by defraying costs for services such as home health aides and other support that make it possible for people to age in place.
However, these policies can range from several hundred to several thousand dollars annually and may be out of reach for many people. Factors in the price of a long-term care policy include your age and health at the time of your purchase, the length of time (the elimination period) you choose before long-term care kicks in and where you live. People who wait until they are close to needing long-term care to begin shopping for a policy should expect to pay significantly more than those who bought coverage well before they expected to use it.
If you are like most people, the last thing you want is for your health to make it necessary for you to leave your home and sometimes, your community, to move in with relatives, move to a nursing home or burn through all of your assets. Long-term care insurance helps ensure you will be able to afford the services you need so you can live where you want the way you want – and maybe even leave a little something for your loved ones after you are gone. A financial planner can help you determine if purchasing a long-term care policy is something you should consider as part of your retirement planning.
[Janet Lubman Rathner]