10 Myths About Long Term Care Planning You Need To Know
by Paul Lorrah
Planning for long term care is extremely important but these 10 myths cause most people to fail. Read further to avoid these pitfalls.
MYTH #1: I'm not going to need long-term care: This is what a lot of folks say and while this may be true for some, statistically if you were to turn 65 today, you would have a 73% chance of needing some form of long-term care service during your remaining years. The generation currently facing the greatest growing need for long-term care services are the Baby Boomers. Born between 1946 and 1964, the Baby Boomer generation accounts for roughly 78 million Americans, and according to Medicare.gov, it is estimated that 12 million of them will require long-term care services this year alone.
MYTH #2: That's what health insurance is for and I have good insurance: We hear this a lot but unfortunately health insurance does not cover the cost of long term care. Some plans may provide the Medicare deductible [$170.50/day] for rehab in a skilled facility, but these are short-term in nature and designed around your recovery and rehabilitation. Most long-term care received is for the safety, maintenance and well-being of those with chronic conditions. If you’ll look close enough at your plan, you’ll likely find language that plainly states: “This plan does not cover long-term care.”
MYTH #3: Medicare will pay for long-term care: “half of the approximately 800 baby boomers who responded to a 2019 Insured Retirement Institute survey said they expected Medicare to pay for their long-term care needs. A 2016 AP-NORC poll found that, among respondents age 40 and older, 38%, expected Medicare to pay the bill. “
We see this a lot in our office, people routinely confuse Medicare with Medicaid.
Unfortunately, Medicare will not pay for your long-term care needs. Medicare is designed to help those over the age of 65 keep on top of their healthcare needs, long-term care is not one of them according to the federal government. And while Medicare Supplemental plans are often touted to cover things that Medicare leaves behind, long-term care is still not one of them.
MYTH #4: I’m too young to need long-term care: Even if you’re under age 65, you may require long-term in-home or residential care services due to an injury or illness. On average, around 8% of people between ages 40 and 50 have a disability that could require long-term care services.. While the majority of people who require long term care are older, younger people can require it anytime due to severe unexpected illnesses, diseases, injuries, or accidents. Because the need for long term care can arise at any time in a person’s life, it is wise to plan in advance.
Additionally, many Asset Protection Plans require several years to "cure". by starting your planning early, you be sure that your assets are protected and don't have to be spent on long term care costs.
MYTH #5: I'm not worried, my spouse or kids will take care of me: Statistically, 25% to 30% of baby boomers may be divorced or widowed by the time they reach ages 55 to 64. This increased the likelihood of depending on children to provide care.
However, studies have shown that most children are unable to provide care for an aging parent due to the demands of their job, family and finances. Additionally, long term care requires a skill set that most do not have.
Additionally, if you're spouse becomes ill before you, they won't be available when you need care.
MYTH #6: I have savings, I'll be ok: Paying for long-term care expenses from personal savings is one option. However, you'll soon find that this method will get tiresome fast and drain your finances quicker than you think.
First, consider the type of long-term care services you would like [or need] and the cost of that care before relying on this method.
In 2020, the average cost of assisted living in Delaware is $6,000 per month. More in PA. NJ and Maryland and nursing home costs range from $10,000 - $15,000 a month.
Home care can sometimes be just as expensive at $25-$30 per hour
The duration and level of long-term care will vary from person to person and often change over time.
Here are some statistics (all are “on average”) you should consider: Someone turning age 65 today has almost a 73% chance of needing some type of long-term care services and supports in their remaining years.
Women need care longer (3.7 years - nursing home) than men (2.2 years - nursing home).
One-third of today’s 65 year-olds may never need long-term care support [which unfortunately means you passed away before needing it].
20% will need it for longer than 5 years.
Those figures are length of time in a nursing home, many people first must receive some care at home then transition to assisted living. Bringing their total length of time needing some level of care to 5 or more years.
Imagine paying for 2 years of home care - $54,000, 2 years of assisted living at $144,000 and 1 year in a nursing home - $120,000
That's $318,000 - maybe more if more time is spent in any category above.
Most don't have that much. And even if you do, wouldn't you rather leave most of that to your family?
MYTH #7: Most seniors receive long-term care in nursing homes: According to AARP, approximately 14 million adults in the US currently need long-term supports and services.
Approximately 700,000 of these are long-stay residents of nursing homes.
Roughly 600,000 are getting short-term post-acute care / rehabilitation in skilled-nursing facilities
About 500,000 are in assisted living.
The bulk of these 14 million people — approximately 85% or 12 million live in their own and receive in-home care.
MYTH #8: I have long-term care insurance, I'll be ok: Having a long term care policy is great but it’s unrealistic to expect that a long-term care insurance policy will cover all of your expenses.
Many policies only cover 1/3rd of the daily rate at a nursing home.
Additionally, premiums may rise annually and soon you may find that traditional long-term care insurance can be quite costly and the amount you have contributed may not justify the benefits you’ll receive.
Note: sales of traditional long term care policies have been declining and consumers are becoming much more interested in hybrid life insurance policies that add long-term care benefit riders.
MYTH #9: I'm going to grow old and die in my home:
Sure, nobody wants to go to a nursing home. But aging at home is not always possible. It requires a strong family support system and trained caregivers.. You have to be able to receive the level of care needed. Most times, as health declines, staying at home is no longer an option..
Living alone at home can also be isolating, which is itself a serious health risk. Some older adults now living in facilities could have theoretically remained at home. But for others, safe and fully supportive aging in place is unrealistic.
MYTH #10: You’ll need to parent your parents as they age: Older adults may need support from their children but they don’t want to be controlled by them. Seniors don’t want to lose their autonomy and many of them resist allowing their children to take over their lives.
This is why adult children should think of themselves as care partners, not caregivers. A 2018 study by Northwestern University geriatrics professor Lee Lindquist found that older people were more likely to accept support if they felt that, contrary to being parented, “by accepting help, they were in turn helping the person providing the help.”
Planning in Advance for Long-Term Care costs:
The significant costs of long-term care can impact retirement plans, savings, assets and the level of care one receives.
That’s why it’s so important that people speak with one of our experienced specialists about long-term care preferences and to put a plan in place.
Medicaid Planning for Long-Term Care
Medicaid is supplement to the Social Security act that will pay 100% of the cost of nursing home care and in some states home care and assisted living care as well.
However you need to plan in advance for best results.
Medicaid planning should be started while you are still able to make legal and financial decisions or can be initiated by an agent under a properly-drafted Power of Attorney.
Even if you are already in a nursing home or receiving other long-term care planning is possible.
Generally though, the earlier someone plans for long-term care needs, the better.
Just remember though, it's never too late to begin your planning.
To begin long-term care planning (and incapacity and estate planning) right away, please call us now to make an appointment for FREE consultation.