Growing old is inevitable, but its outcomes are different for each person. Some remain healthy well into their 80s or 90s. Others require long-term care much sooner. If you’re only in your 30s or 40s, it’s not something you may want to think about. Yet as the costs of long-term care increase every year, it’s wise to prepare. Understanding these costs and payment options can help you avoid financial jeopardy.
Defining Long-Term Care Needs
We cannot predict the future with absolute certainty. Healthy lifestyles may help us avoid conditions such as strokes and cardiovascular diseases. But there are other severe illnesses – COVID-19 or certain cancers, for instance. It's dangerous to assume that you won't need home-based services or care in a long-term facility. The National Institute on Aging describes different long-term care needs:
- Activities of daily living – grooming, bathing, dressing, and so forth
- Homemaker services – laundry, housekeeping, and cooking
- Physical, occupational, and speech therapies
- Nursing care – checkups, medications, treatments
- Visitation and companionship
- Transportation
- Emergency medical alert systems
A Quick Look at Long-Term Care Costs
Nursing and assisted living costs can run into the tens or hundreds of thousands. LongTermCare.Gov reveals the average price tags on these services:
- Nursing homes care: $6,844 to $7,698 per month
- Assisted living facilities: $3,628 per month
- Adult day centers: $68 per day
- Personal care assistants: $20 per hour
- Health aides: $20.50 per hour
One year in a nursing home could run you at least $90,000, and a year in an assisted living center can cost over $40,000. That’s no small change – some households don’t even make that kind of money in one year. With no assistance or plan to pay, these expenses can bankrupt your family. To add another fly in the ointment, some states have filial responsibility laws. They’re rarely enforced, but they hold adult children responsible for funding their parents’ care if there are no other resources to pay for it.
Paying for Your Long-Term Care
The National Institute on Aging offers a useful guide about paying for long-term care. Several government programs can help, including Medicare and Medicaid, for example. A few states offer PACE, a Medicare program that pays for medical needs, social services, and long-term care costs. Medicare is available for anyone age 65 and older. If you receive Social Security disability benefits, you'll qualify for coverage after two years. Medicaid can help people with lower incomes, but each state has qualification guidelines. Keep in mind that Medicare typically pays for only short-term nursing home stays. If you require a permanent stay, you’ll need to find other payment options. Also, the availability of government aid can change at any time.
Long-term care insurance may also be helpful. These policies usually cover nursing home, palliative, or hospice care. You can buy a la carte coverage or choose a comprehensive policy for both facility and home care. If you’re young and healthy now, you’ll pay less for long-term care coverage. If you already have life insurance, ask your insurer about these policies. Some insurance companies can bundle life and long-term coverage. You can also use annuities and trusts to fund your care. An annuity provides regular payments during a specific time period. Trusts allow you to transfer assets to another person who can pay for your services.
Preparing for Your Future
So, you've seen long-term care costs in stark relief and you're freaking out. That's completely understandable. Thankfully, you can take steps now to help yourself and your family. Knowing probable costs and available resources is key. With that knowledge, you can develop a plan that provides for your needs and keeps your family financially sound.
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