According to research from the U.S. Department of Health and Human Services, long-term care is a probable outcome for many retirees. The agency estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care at some point in their lives. While a third of all seniors will never need care, 20 percent will need it for more than five years.1
Long-term care is a broad term that refers to a variety of services. However, it generally includes extended assistance with basic living activities such as cleaning, bathing, eating and more. While it’s often provided in an assisted living facility, it can also be provided in your home by a health aide or even family.
Many people believe that in-home care is less expensive than care provided in a facility. That’s usually not the case. A Genworth study found that a room in an extended living facility and a full-time, in-home health aide both cost $4,000 per month on average in 2018.2 Considering that care is often needed for a year or more, it’s easy to see how costly long-term care can be.
Unfortunately, many seniors fail to plan for long-term care because they think that they won’t need it or that they can simply rely on family. Many of these assumptions are born from a misunderstanding of why long-term care is needed. Below are descriptions of some of the major health issues that can cause a long-term care need and what kind of care is often required. With a better understanding of the threat, you can implement a plan and a funding strategy.
What conditions cause a need for long-term care?
Cognitive issues are by far the largest driver of long-term care. One out of every four seniors who needs long-term care has Alzheimer’s disease.3 The risk of suffering Alzheimer’s is substantial. According to the Alzheimer’s Association, your risk of developing the disease doubles every five years after age 65. By age 85, almost one-third of seniors are at risk.3
Even if you don’t develop Alzheimer’s, you could still need long-term care. In fact, nearly half of all long-term care cases are caused by something other than Alzheimer’s. Below is a list of the leading conditions that cause a need for long-term care, according to the Society of Actuaries:4
- Alzheimer’s disease: 25 percent
- Stroke: 9 percent
- Injury: 9 percent
- Circulatory issues: 9 percent
- Cancer: 8 percent
- Nervous system issues: 6 percent
- Respiratory issues: 5 percent
Also, keep in mind that many of these health challenges are progressive and incurable. You could live for years with Alzheimer’s, cancer, heart disease or any of the other issues. They’re likely to intensify as you get older. While you may be able to rely on family and friends in the early stages, that may not be the case as the disease progresses.
What kind of services does long-term care provide?
Another important factor in estimating the cost of long-term care is predicting the type of care that’s provided. Many people believe that Medicare will cover their long-term care needs. Medicare may pay for some of the care, but that usually only happens if it involves skilled nursing and is focused on recovery and treatment.
Very often, long-term care isn’t about treatment. While there may be medication involved, much of long-term care is focused on custodial assistance and lifestyle support. Long-term care aides often help with the following activities:
- Using the restroom
Those activities usually don’t fall under the umbrella of skilled nursing, which means the care is unlikely to be covered by Medicare. If you don’t have a long-term care funding strategy, now may be the time to develop one. Long-term care insurance could be an effective tool to minimize your risk and limit your out-of-pocket costs.
Ready to develop your long-term care strategy? Contact us today at Oliver Financial Group. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
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