A Note from Marguerita Cheng, CFP® Pro — I invite you to tune in for this week’s episode of my podcast and video show, Margaritas with Marguerita, where for 15 minutes each Friday at 5 pm EST, women learn from industry experts how to flex their financial muscles, live on Facebook.
Meet our guest: Barclay Sisk, VP, 1st Atlantic Brokerage
Today’s topic: Long-Term Care & Legacy planning
Rita and Barclay will discuss:
- What is long-term care?
- What are the levels of care, and who pays for them?
- Planning Ahead: What level of care do you want, and how will you pay for it?
- What are other things to think about when it come to your future care needs?
Barclay says: “We provide Investment Advisors and Employee Benefits Advisors advice on how they play a part in their clients preparing for the possible need of long-term care services in their lifetimes. Our proprietary system and software were developed for the Investment Advisor. It compares options and gives clients a pathway to affordable coverage that keeps benefits more in line with the cost of care.” Learn more at www.1statlantic.com.
Scroll down for Barclay’s insights into how you can benefit most from long-term care.
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The Story Behind Long-Term Care
Long-term care is a variety of services and supports to meet health or personal care needs over an extended period of time. Most long-term care is non-skilled personal care assistance, such as help performing everyday Activities of Daily Living (ADLs), which include: bathing, dressing, toileting, transferring (to or from bed and chair), caring for incontinence, and eating. The goal of long-term care services is to help you maximize your independence and functioning when you are unable to be fully independent.
Who Needs Long-Term Care?
Long-term care is needed when you have a chronic illness or disability that causes you to need assistance with Activities of Daily Living. Your illness or disability could include a problem with memory loss, confusion, or disorientation. (This is called Cognitive Impairment and can result from conditions such as Alzheimer’s disease.) This year, about 9 million Americans over 65 will need long-term care services. By 2025, that number will increase to 12 million. While most people who need long-term care are age 65 or older, a person can need long-term care services at any age. Forty (40) percent of people currently receiving long-term care are 18 to 64 years old.
What Are My Risks of Needing Long-Term Care?
About 70 percent of individuals over age 65 will require at least some type of long-term care service during their lifetime. Over 40 percent will need care in a nursing home for some time. Factors that increase your risk of needing long-term care include:
- Age – The risk generally increases as you get older.
- Marital Status – Single people are more likely to need care from a paid provider.
- Gender – Women are at a higher risk than men, primarily because they live longer.
- Lifestyle – Poor diet and exercise habits can increase your risk.
- Health and Family History – also impact your risk. Your current health and your parent’s health affect your ability to plan. That’s why this planning needs to be addressed sooner rather than later.
How Much Care Might I Need?
It is difficult to predict how much or what type of care one person might need. On average, someone age 65 today will need some long-term care services for three years. Service and support needs vary from one person to the next and often change over time. Women need care for longer (on average 3.7 years) than men (on average 2.2 years). While about one-third of today’s 65-year-olds may never need long-term care services, 20 percent of them will need care for more than five years. If you need long-term care, you may need one or more of the following:
- Care or assistance with activities of daily living in your home from an unpaid caregiver who can be a family member or friend;
- Services at your home from a nurse, home health/home care aide, therapist, or homemaker;
- Care in the community;
- Care in any of a variety of long-term facilities.
Generally, services provided by caregivers who are family or friends are unpaid. Sometimes called informal care, these paid services often supplement support from family and friends.
How Do Care Needs Change Over Time?
Many people who need long-term care develop the need for care gradually. They may begin needing care only a few times a week or one or two times a day, for example, help with bathing or dressing. Care needs often progress as you age or as your chronic illness or disability becomes more debilitating, causing you to need maintenance on a more continual basis, for example, help using the toilet or ongoing supervision because of a progressive condition such as Alzheimer’s disease.
Some people need long-term care in a facility for a relatively short time while recovering from a sudden illness or injury and then may be able to be cared for at home. Others may need long-term care services on an ongoing basis, for example, disabled from a severe stroke. Some people may need to move to a nursing home or other facility-based setting for more extensive care or supervision if their needs can no longer be met at home.
Cost of Long-Term Care
Long-term care is expensive. One year of care in a nursing home, based on the 2021 US average, costs over $94,896 for a semi-private room. Assuming you need periodic personal care help from a home health aide (the average is about three times a week), one year of care at home would cost almost $45,000 a year. Costs for long-term care services vary greatly depending on the type and amount of care you need, the provider you use, and where you live. For example, many care facilities charge extra for services beyond the basic room-and-board, although some may have all-inclusive fees. Home health and home care services are provided in two to four-hour blocks of time, referred to as “visits.” An evening, weekend, or holiday visit may cost more than a weekday visit. Some community programs, such as adult day service programs, are provided at a per-day rate, and rates may differ based on the type and variety of programs and services offered.
Who Pays for Long-Term Care?
Consumer surveys have revealed common misunderstandings about which public programs pay for long-term care services. Many people believe they can rely on Medicare to pay for any long-term care services they will need. However, Medicare only pays for long-term care if you require skilled services or recuperative care for a short time. Medicare does not pay for what comprises the majority of long-term care services – non-skilled assistance with Activities of Daily Living.
Medicaid is the joint federal and state program that pays for the largest share of long-term care services, but only if you meet financial and functional criteria. Other Federal programs such as the Older Americans Act and Veterans Affairs pay for some long-term care services, but only for specific populations and particular circumstances.
Most employer-sponsored or private health insurance forms, including Health Maintenance Organizations (HMO) or managed care, follow the same general rules as Medicare. If they cover long-term care, it is typically only for skilled, short-term, medically necessary care. Therefore, most people use their own out of their income or assets.
An increasing number of private payment options help cover the costs of long-term care services. These include long-term care insurance, reverse mortgages, and other options. It is essential to understand the differences between public programs and private financing options for long-term care services. Each public program and private financing source has its own rules for what benefits it covers, eligibility requirements, co-pays, and premiums. Consult your Advisor on your best options if you want Home Health Care.
Questions? Click here to send an email to Barclay Sisk.