Long-Term Care Pt. II
There are a variety of different factors to consider when planning for long-term care. First, you should consider where you plan to live when you retire, what setting you prefer, and how much in long-term care payments you can afford to pay out-of-pocket.
A few other points to make note of include: the age at which you apply for your policy, who to insure on the policy, and avoiding the assumption that you can pay for LTC on your own. The cost of LTC insurance is based off of your age and health when you apply, so the older and worse these two factors are, the higher your insurance may cost. There can be a large difference in the cost of insurance when purchasing it at age 50 compared to age 60. Another factor to avoid is insuring only one spouse on the policy. This can increase financial and emotional burden of LTC if the opposite spouse unexpectedly needs care. Lastly, depending on your financial situation it may be easy to assume you can pay for LTC on your own. Even for wealthy individuals, paying a manageable insurance premium may help protect your loved ones and assets.
Long-Term Care Planning Pt. I
There are three steps to long-term care planning: understanding the risks, avoiding mistakes, and reducing costs. It’s hard to think about needing full assistance every day in order to get dressed, bathe, and eat, but with people living longer this day in age considering long-term care during future financial planning is a real need. According to the National Clearinghouse for Long-Term Care Information, 70% of people who reach age 65 will need some sort of care in their lives. The risks with future planning are heightened by the unknown, or not knowing how long these services will be needed. For example, individuals with Alzheimer’s disease may need 24-hour care for up to 10 years.
The three major risks of long-term care include the financial, emotional, and physical burdens it places on families and the consequences of not having a plan. A few years of paying for long-term care can harm a lifetime’s worth of savings. According to the American Association for Long-Term Care Insurance, the breakdown in costs of long-term care is as follows:
- Home Health Aide Hourly Rate = $21
- Homemaker/Companion Hourly Rate = $20
- Adult Day Care Services Daily Rate = $69
- Median Monthly Cost of Assisted Living Communities = $42, 750
- Annual Nursing Home Semi-Private Room = $79,800
- Private Room = $90,500
The financial impacts may exacerbate the emotional and physical burdens of providing care to a loved one. Procrastinating the formulation of a long-term care plan until it is actually needed may severely impact your finances, quality of life, and independence. Establishing a long-term care insurance plan may help reduce these three risk factors.