Misunderstand long-term care, and you could contend with financial drain, mental strain and family pain as you scramble to meet the unexpected challenges of a life-changing terrain.
Failing to account for long-term care needs is “leaving a growing number of Americans — and their families — unprepared for the financial and emotional toll that often comes with aging,” says Holly Snyder, Nationwide Life Insurance president, in a statement about a recent company survey revealing respondents’ fears and misconceptions about long-term care.
On behalf of Nationwide, The Harris Poll surveyed 1,324 adults age 29 and older with household incomes of at least $75,000 for the latest annual Nationwide Retirement Institute Long-Term Care survey.
Here’s what many people get wrong about long-term care, according to the survey, and how you can better plan for your own needs and those of a loved one.
Wrong: You won’t need long-term care
The Nationwide survey found that 41% of respondents say they doubt they’ll live long enough to need long-term care, but the stats tell a different story.
According to the federal agency Administration for Community Living (ACL), if you turn 65 today, you have almost a 70% chance of needing some type of long-term care services at least once in your life. You might even be among the 1 in 5 who will need long-term care for more than five years.
On average, women need long-term care for 3.7 years compared with 2.2 years for men.
You need long-term care when you can no longer carry out “activities of daily living” such as bathing, walking, dressing and toileting. You might think of nursing homes and adult daycare, but most such care is actually provided at home, the government agency says.
Wrong: Medicare will cover the costs
More than half of the Nationwide respondents say they will rely on government programs such as Medicare and Medicaid to cover long-term care costs.
However, Medicare covers only up to 100 days of skilled nursing home care after a hospitalization, and even then you might face deductibles and copays. The average Medicare-covered nursing home stay is only 22 days, and Medicare does not pay for non-skilled assistance with “activities of daily living.”
The majority of people over 50 say they would have difficulty paying an estimated $100,000 a year for nursing home care or an estimated $60,000 for a paid nurse or aide at home.
If you use up your own money or have limited assets, you might be eligible for long-term care coverage through your state’s Medicaid program. Find your state here to get started.
Medicaid may pay for nursing homes as well as in-home services such as housecleaning, meal preparation, laundry, grocery shopping, bowel and bladder care, bathing, grooming and accompaniment to medical appointments.
Besides tapping your retirement accounts and other savings, financing options include long-term care insurance, reverse mortgages and annuities.
Wrong: Insurance is too expensive
Nearly 40% of the Nationwide survey respondents say long-term care insurance is too expensive to prioritize. However, most overestimate its cost.
Survey participants were shown a typical policy for a 50-year-old man that comes with six years of coverage available immediately at $2,000 a month and increasing annually, reaching $5,600 a month at age 85 and continuing to increase.
More than half of respondents expected the monthly premiums to run $150 or more — and 23% guessed $500 and up.
After learning that the actual cost for such a policy was locked in at an average of $130 a month, 47% of respondents said they would be more willing to consider purchasing similar long-term care insurance for themselves.
When shopping for long-term care insurance, consider the services you’ll need, where you’ll need them, how much the policy will pay, how long it will pay and if it has a lifetime cap. You can explore other options such as hybrid LTC-life insurance policies, which will pay a benefit to heirs if you die without using long-term care benefits.
As Money Talks News founder Stacy Johnson says in this article, read, compare costs and benefits, and decide if this insurance makes sense and is affordable for you.
Wrong: You should wait until near retirement to buy insurance
The longer you wait, the more you can expect to pay for long-term care insurance because you’ll be that much closer to needing care and receiving benefits from your policy.
On the other hand, buy too soon and you could be diverting money better invested in your retirement account, your children’s tuition or other financial priorities, warns KFF Health News.
The “sweet spot,” many advisors recommend, is in your 50s, which is what 26% of Nationwide survey respondents expect. However, nearly half (42%) believe the best time to buy is between ages 60 and 90.
“Your money pays for long-term care insurance — but your health buys it,” according to the American Association for Long-Term Care Insurance, which tracks rates.
You’re more likely healthier in your 50s than your 60s, 70s or 80s, so premiums are likely to be lower than if you wait — if you could even still qualify for a policy at a later age.
Wrong: It’s never too late to buy insurance
The vast majority — 7 in 10 — of Nationwide survey respondents feel it’s never too late to buy long-term care insurance. However, as the National Association of Insurance Commissioners and others caution, not everyone can get it.
“If you already have health problems that could lead to long-term care (for example, Alzheimer’s disease or Parkinson’s disease), you probably won’t be able to buy a policy,” the association warns.
You could also be denied if you already use long-term care services, already need help with “activities of daily living,” have AIDS, have had a stroke in the past year or two, or have metastatic cancer (cancer that has spread beyond its original site), the ACL says.
Wrong: Family can always take care of you
More than 40% of respondents feel it’s their family’s responsibility to provide long-term care.
Unpaid family and friends are the backbone of our nation’s long-term care system, the ACL says, but that can be a costly burden for caregivers.
About 80% of home care is provided by unpaid caregivers who spend an average of 20 hours a week giving care. Most caregivers — about two-thirds — are women, and 14% are already age 65 and up.
Surveyed caregivers say they pay an average $372 a month out of their own pockets for loved ones’ food, co-pays, prescriptions, transportation and other items. Four in 10 agree with the statement, “I’m afraid that caregiving expenses will keep me from ever retiring.”
Worries about becoming financial, physical or emotional burdens for their loved ones are why many respondents tell Nationwide they would consider buying long-term care insurance. Nearly 40% say they would purchase long-term care insurance to let their “family or friends focus on enjoying time with them instead of being their caregivers.”
Long-term care insurance policies and some state Medicaid programs could pay your caregiving family members.
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