The Facts About Long Term Care
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1. Understanding long term care.
Long term care is the care you may need if you are unable to perform daily activities on your own. That means things like eating, bathing, dressing, transferring and using the bathroom. The goal of long term care is to help you maintain your lifestyle as you age.
Care may be required due to physical impairment or cognitive impairment. The effects of Alzheimer’s, strokes, diabetes, auto accidents, sporting accidents and dementia commonly trigger the need for long term care services.
Long term care can be received at home, in an assisted living facility or skilled nursing facility.
- Who Needs Long Term Care? As we age, it becomes more likely we will need long term care services. The U.S. Department of Health and Human Services reports that 70% of people turning age 65 can expect to use some form of long term care during their lives. The risk is also significant for working-age adults as 42% of the 13 million people receiving long term care services are between the ages of 18 and 64.
2. The cost of long term care.
The cost of long term care depends on the type of care you need and where you live. Currently the median cost in the New York area is $161,148 per year for a private room in a nursing home. A home health aide providing 44 hours of care per week will cost you $57,200 per year.
Annual Median Costs: National (2019)
|In-Home Care||Community and Assisted Living||Nursing Home Facility|
|Homemaker Services $57,200||Adult Day Health Care $22,100||Semi-Private Room $146,000|
|Home Health Aide $57,200||Assisted Living Facility $83,400||Private Room $161,148|
In some situations, people need skilled nursing care in their home to assist with medication and other medical needs. It's important to know these costs when planning for future needs.
In-Home Care - Skilled Nursing $87.50 per visit (Based on National Median)
Genworth Cost of Care Survey 2019, conducted by CareScout®, June 2019
3. How to pay for care.
Mention long term care and most people envision the recipient as an older person in their later years. However, the need for long term care can arise when you least expect it, as the result of an accident or sudden onset illness or disease. In fact, 37% of long term care recipients are under 65 years old1. Regardless of the cause, when you or someone you care about requires long term care, it’s important to know the options when it comes to funding the care you need, where and how you choose to receive it.
Medicare and Medicaid both have physical and/or financial qualifications to determine if you are eligible for benefits.
Medicare is the federal health insurance program designed primarily for people aged 65 and older. Adults with certain permanent disabilities or medical conditions may qualify for coverage at a younger age.Medicare Part A is hospital insurance that covers portions of a hospital bill for inpatient hospital care, hospice care and limited time in a skilled nursing home facility. Deductibles, coinsurance and copayments will generally need to be paid even if Medicare covers the service. Medicare does not pay for homemaker services. Medicare will pay for services once the following conditions are met:
- You had a recent prior hospital stay of at least three days.
- You are admitted to a Medicare-certified nursing facility within 30 days of your prior hospital stay
(not all facilities are Medicare-certified).
- You need skilled care such as physical therapy or skilled nursing services.
If you meet ALL of these conditions, Medicare will pay 100% of your costs for the first 20 days. For days 21-100, you pay your own expenses up to $170.50 per day and Medicare pays any balance. After 100 days, you are fully responsible for the entire cost of your care for each day you remain in a skilled nursing facility.2
Medicaid is a joint federal and state public assistance program for financing health care for low-income people. It pays for health care services for those with low incomes or very high medical bills relative to income and assets. It is the largest public payer of long-term care services. Medicaid pays for certain health services and nursing home care for people with low incomes and limited assets. Eligibility is usually based on income and personal financial resources. So, to qualify for Medicaid you may have to spend down your assets. It's important to know that Medicaid benefits may vary by state.
Do you have a healthy amount of money saved up for retirement or other future needs? If you can spare it, that money may be a good choice to cover long term care costs for you or a loved one. 63%2 of caregivers used their own retirement and savings funds to pay for care.
- $306,600 risk 2019 (Based on annual cost in 2019 x 3 years of care)
- $412,044 risk 2029 (Based on projected cost in 2029 x 3 years of care)
- $553,755 risk 2039 (Based on projected cost in 2039 x 3 years of care)
Long Term Care Insurance
Long Term Care Insurance (LTCi) can be used to reimburse policyholders for long term care expenses administered in your home, adult day care center, assisted living facility or nursing home. LTCi is issued as either an individual policy or you can purchase coverage through some employers that offer group plans.
1. 2019 U.S. Department of Health and Human Services, https://longtermcare.acl.gov/the-basics/, 10/10/2017.
2. Genworth Beyond Dollars 2018, https://pro.genworth.com/riiproweb/productinfo/pdf/282301.pdf
4. Long term care insurance. (LTCi)
Long Term Care Insurance is an insurance policy that helps reimburse long term care expenses. LTCi is designed to keep you out of a nursing home and in the environment you want to be in. Long term care insurance generally covers long term care not covered by health insurance. You can select where you want to receive services and the maximum value of your long term care protection.
The cost of your long term care policy is based on:
- Your age when you buy the protection
- The maximum amount the policy will pay per day
- The maximum number of days (years) the policy will pay for care
- The lifetime maximum a policy will pay is the maximum amount per day times the maximum number of days
- Good health and spousal discounts can lower premiums significantly. Other plan design options can also lower premiums.
New York State provides a 20% tax credit toward your insurance premium. In addition, there are federal tax deductions that may be available.
Ira Stitz Associates is a boutique financial services firm that concentrates in estate planning and wealth preservation for high net worth individuals and their families regarding their distinctive needs. Ira Stitz founded the company in 1990 and still retains the same passion and enthusiasm as he did on the first day he put the keys in the door.