With the growing population and the life expectancy age rising, there is no question that the need for long term care will be impacted. Currently there is nearly a 50% chance that individuals will need care provided to them in a 24 hour skilled nursing care facility. The average cost at which this care is provided is approximately $300 per day ($9,000 per month) for a private room and $260 per day ($7,800 per month) for a semi-private room. There are many factors taken into consideration for care costs at these facilities and they will differ from one person to the next. Such factors include but are not limited to, your location (city, state), your provider, how long you will be staying and the level of care services needed. It is important to know that according to The Institute of Medicine, by 2030, the United States will need an additional 3.5 million long term care health care workers in order to sustain the current health care worker to elder person ratio.
Can your financial profile handle the retirement lifestyle you wish to live out as well as the costs of a nursing home or assisted living facility? For individuals who are not married or in a partnership, you are more likely to need care in one of these facilities. This means you are looking at approximately $108,000 a year for a private room and $94,000 a year for a semi private room. What happens if you need the average length of care services, 2.5 years of care for men and 3 years of care for women? That’s between $270,000 to $320,000 that you will need for one person in a private room with today’s cost analysis. Meaning, as the demand for care rises over the years, so does the cost of care. How much of your savings and investments would you have to pay down in order to cover these costs? If you have a good LTCI policy, the answer would be, a very small amount if not nothing depending on the plan you have in place.
Factoring in those costs for a married couple, if they both decided to go to an SNF or ALF then these costs for care are doubled. Without a plan in place to protect your assets, you can say goodbye to retirement funds and hello to long term care costs. Not to mention, the chance of you and your spouse needing care at the same time is pretty low which means the first person to need care will most likely spend down a majority of your shared assets leaving the other spouse to manage the day to day living costs and hoping there is enough left over in the chance that they need long term care services.
The risk for women needing care is higher than the average man simply because women live longer than men. Some may say it is safe to assume that the male counterpart in a partnership will need care before the female. In most cases, if this is the situation, then the spouse would typically opt to care for their partner as long as they can in the comfort of their own home before ever going to a care facility. This does cut down care costs quite a bit if a family member is providing the care however not all insurance policies will pay out the benefit if a family member is providing the care. Which leaves you to cover these costs out of pocket and again, spend down your assets. With a reputable hybrid LTCI policy in place, you can have not only a family member providing care but also you can get a cash indemnity benefit which cuts out the reimbursement process and allows you to spend your LTCI benefits as you see fit.