As our population ages, the fiscal burden of long-term care is especially worrisome. As per the experts’ estimates, the average future lifetime cost of long-term care for people turning age 65 today is around $122,400. More than half—57%—of Americans who celebrate this milestone will go on to become severely disabled. This would have massive implications—not just on their health—but on the long-term care costs.
The financial realities of long-term care can be just as staggering. For many people that’s not even close to the worst case scenario when it comes to costs. Studies show that 15% of people requiring long-term care will pay at least this much out-of-pocket on care in the future. The need for care can arise unexpectedly, and as Carolyn McClanahan notes, “The challenge with long-term care costs is they’re unpredictable.”
In addition to the challenges every state faces, nationally, long-term care is becoming increasingly expensive. To take just one example, the monthly cost of using a home health aide averages about $6,300 per month. A private room in a nursing home costs an average of $9,700 monthly. Yet these figures underscore the need for major steps to alleviate economic plight on families and individuals across the country.
Even with these disturbing statistics, many Americans are still not ready to deal with the financial burden in caregiving. A survey revealed that 73% of workers believe they may need to provide long-term care for at least one adult in the future. Perhaps most startling, just 29% of potential caregivers have even bothered to calculate what they will need to spend on care down the road.
Bridget Bearden emphasizes the disparity between expectations and reality: “It’s pretty clear [workers] don’t have that amount of savings in retirement, that amount of savings in their checking or savings accounts, and the majority don’t have long-term care insurance.” She further questions the source of funds for such an expensive necessity: “So where is the money going to come from?”
Long-term care insurance could be an answer for Americans who want to plan ahead for the costs of long-term care. Experts suggest that such policies may be most advantageous for individuals at high risk of requiring care for extended periods. Traditional stand-alone long-term care insurance policies are cost-prohibitive for many families.
In light of the increasing demand for affordable long-term care options, a few states aren’t waiting around. The state of Washington has already taken this step — establishing a public long-term care insurance program for state residents. California, Massachusetts, Minnesota, New York, and Pennsylvania are doing their part to pave the way for such undertakings. Their goal is to implement a public option to fund long-term care.
These programs awe and inspire, they give hope to millions. What is less often understood is that households may need to exhaust the majority of their financial assets before they become eligible for benefits. This unfortunate reality makes it all the more imperative to plan and prepare for possible long-term care needs in the future.
McClanahan supports hybrid insurance products that merge life with long-term care coverage. These types of options have the potential to offer much more flexibility and affordability than standard plan offerings. The home and community-based long-term care landscape is changing quickly. It’s important for people to consider what choices they make, in order to be ready for what lies ahead.
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