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November is Long-Term Care Awareness Month

November 11, 2020
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“If you’re not allocating some of your dollars to long term care, you’re allocating all of them.”  That quote has stuck with me since the first time I heard it.  In light of the fact that November is Long Term Care Awareness Month, I wanted to share some thoughts on how to incorporate long term care into your financial plan.

Before I get into solutions, let’s talk about some of the facts.  The fact is about 70% of us will need some type of Long Term Care in our lives.  The average length of a long term care event is 3 years (3.7 for women, 2.2 for men)*.  But Medicare will pick that cost up for me right?  Sure, for the first 20 days.  After that you have a daily co-pay until day 100 and then you are on your own.  Depending on where you live, being on your own for that bill can be incredibly expensive.  Take a look at this graphic from Genworth showing the average cost of various types of care in the New York area in 2019

These numbers are not meant to scare you, they are meant to encourage you to plan for the possibility.  Older, traditional LTC policies had some flaws.  First, the majority of premiums weren’t guaranteed.  Many of us are living on some type of fixed budget in retirement.  Unfortunately, a notice of premium increases of 10% or even 20% are not uncommon and force retirees into difficult choices. Second, traditional policies reminded me of car insurance.  Many policies seemed to be based around the “use it or lose it” model.  While most of us will need care, if we don’t, why should you pay all of those premiums into a vehicle that doesn’t give back to you or the family.   

When I talk to people in retirement or approaching retirement, health care is always one of the top 3 concerns that they bring up.  The good news is that there are new solutions that have been brought to market by the insurance industry.  Solutions that can guarantee your premiums, as well as guarantee that either you or your beneficiaries will benefit from the policy you put in place.  By beginning the conversation on long term care planning, it will help you understand what programs you can rely on to actually help pay for any type of long term care event.  More importantly, by putting a plan in place it will give you a CHOICE if you were to need help due to an LTC event. 

Feel free to share this with anyone you know affected by these types of life events.

 

*From the U.S. Department of Health and Human Services