Paying for Long-Term Care Isn’t About Luck
Disclaimer: Since Medicaid rules and insurance regulations are updated regularly, past blog posts may not present the most accurate or relevant data. Please contact our office for up-to-date information, strategies, and guidance.
March is synonymous with spring and St. Patrick’s Day. Unfortunately, when it comes to long-term care, your clients can’t depend on the “Luck of the Irish” to land on their feet. Rather, they must properly prepare to pay for the cost of care should a long-term care crisis arise.
What is the Cost of Care?
| Type of Service | Monthly Cost in 2021 | % Increase from 2020 | Projected Monthly Cost in 20 Years |
| Home Health Aide | $5,148 | 12.5% | $9,298 |
| Homemaker Services | $4,957 | 10.64% | $8,953 |
| Assisted Living | $4,500 | 4.65% | $8,128 |
| Skilled Nursing Home (Private Room) | $9,034 | 2.41% | $16,316 |
Source: Genworth Cost of Care 2021
The cost of care, especially at-home services, is significantly increasing year after year. This is due to the higher demand for at-home care since most people prefer to stay in their own homes for as long as possible. Additionally, COVID-19 has changed the landscape for long-term care with new protocols in cleanliness, personal protection equipment, and staffing for facilities.
Who Pays for Long-Term Care?
Medicare will only cover short-term rehabilitative care and only if specific requirements are met. Medicaid has strict financial requirements that require applicants to spend down assets in order to become eligible. Your client’s health insurance (e.g., Original Medicare, Medicare Supplements) does not cover long-term care. This leaves a large portion of care costs to be paid by the care recipient or their family, and many loved ones wind up providing unpaid care to family members who have not pre-planned for this expense. In fact, there are currently 53 million unpaid caregivers in the U.S.
Where Does Long-Term Care Insurance Fit In?
Your clients can purchase Long-Term Care Insurance (LTCI) when they are reasonably healthy before they require care. LTCI gives your client the most flexibility in choosing where they receive care and by whom. Also, since insurance premiums are a fraction of the cost of care, LTCI is one of the most affordable options to pay for care. Plus, LTCI policies can be designed to suit your client’s premium tolerance. Even a small policy will assist your client in protecting their assets and preventing their family from being full-time caregivers.
Read More: The Risk of Longevity
Initiate the Long-Term Care Conversation
Many of your clients may avoid talking about long-term care because they do not want to consider the realities of aging or becoming dependent. However, procrastination is not a plan for paying for long-term care. Encourage your clients to have this discussion with both you and their loved ones, including what their family members’ roles will be if a caregiving situation should arise. Show your clients the cost of care projections and ask them how they will cover these costs. If they have assets to protect, they should certainly consider a Long-Term Care Insurance policy.
May the luck of the Irish be with you and your clients. But be sure to also spread the word about pre-planning for long-term care!