Long Term Care

The following statistics might convince you at least to consider obtaining some kind of long-term care (LTC) insurance.

On average, 70% of people age 65 or older will need some form of long-term care.
The national average cost of a private nursing home room in 2021 was $297 daily or $108,000 annually.
In some states, however, the cost was higher: Massachusetts, $162K; Connecticut, $182K; New York, $159K; Oregon, $133K; Colorado, $117K; Alaska, $378K (while in Texas, a mere $85!). (Source: medicaidplanningassistance.org)
In year 2021, the national average annual cost was $53 for assisted living, and $50K to $200K for in-home care depending on level of care and number of hours.
Of Americans who are 65 years old and older, only about 16% have LTC insurance.
Unpaid family members and friends provide 80% of all long-term care in the U.S.

Should you get LTC Insurance?

Based on the statistics, most people do not have LTC insurance, but they probably should get some form of LTC protection. Typical annual costs of $50K to $150K can quickly deplete the accumulated wealth of most people. If you have substantial equity in your home, then a reverse mortgage can provide a financial reserve. For most people, however, several years of LTC expenses can significantly reduce, if not obliterate, any legacy they intended to leave to their family.

No Good Reasons to Avoid LTC Planning

People typically avoid LTC planning for a combination of some obvious, but not very good reasons. Firstly, conventional LTC insurance can be expensive. Since there is no absolute certainty that LTC will be necessary, many people resist paying for something they might not need, and then hope for the best. The statistics do not justify that hope, however.

Medicare or Medicaid Alternatives? Many have misguided ideas about the role of Medicare and Medicaid. In short, Medicare only covers short-term rehabilitation after a hospital stay. In contrast, Medicaid will cover long-term care expenses at government/tax-payer expense, but only if an individual has no income and no assets. (Note: certain Medicaid-planning techniques available from elder-law and estate-planning attorneys can ameliorate some of Medicaid’s draconian means testing and collection procedures. See more at Law Office of Thomas J. Swenson.)

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