How Does Long-Term Care Fit a Financial Plan?
- People require long-term care when they can no longer manage their own activities of daily living (ADL), such as bathing, eating or dressing themselves. Absent a medical condition that requires hospitalization, family members often perform these tasks. Health insurance generally does not cover this type of care. Medicare will cover ADL only for a short time after a hospital discharges a patient. Family members may need to leave employment to care for an elderly father or mother. Including a long-term-care insurance policy in the financial planning process protects the entire family from the financial and emotional stress of caring for a relative suffering from a condition such as Alzheimer's disease.
- According to the U.S. Department of Health and Human Services, one year of nursing home care in 2008 averaged $68,000 for a semi-private room. Comparatively, periodic home care services cost an average of $18,000 per year. Far less expensive, home care still puts financial and emotional stress on family members if they must shoulder the entire responsibility. The home-care feature in a long-term care policy can keep an elderly patient out of a nursing home, paying for in-home care. Long-term care policies may also cover day care facilities and provide respite services when family members need a break. The average home-care patient receives non-skilled nursing services for three years. When home care options end, the policy covers full-time nursing home care.
- Although 70 percent of people over age 65 will require some kind of non-skilled nursing services, many avoid planning for long-term care. In his National Care Planning Council report, "The Need for Long-Term Care Planning," Thomas Day provides compelling arguments for including long-term-care planning in your financial plan. More than 50 percent of people over 85 currently receive long-term care, and this segment of our population is growing faster than any other. At the same time, the number of children being born grows smaller, resulting in fewer family members to care for the increasing number of elderly individuals. Many people mistakenly believe that Medicare or other government programs will cover the costs for non-skilled nursing care.
- People who have cared for an elderly relative are more likely to incorporate long-term care into their own financial plan. Many others think the cost of long-term-care insurance is not worth the expense. According to Kimberly Lankford in the June 2009 "Kiplinger," you can construct your long-term-care policy in many ways. Choose a coverage level, write a policy that shares benefits with your spouse, and choose a coverage term based on family history. Talk to a financial adviser about the risks to you and your family, and plan to protect your family's financial and emotional future.