Long-Term Care & You

Did you know?

In 2020, US citizens live longer than before. If you’re 85 years-young, you’re in the most rapidly growing age group. By the year 2050, the U.S. Census predicts there will be 24 million elders over the age of 85. Think about that: 24 Million Aged 85!  Fifty percent will require assistance with daily-living activities and 20% over 75 years-young will require assistance.

Now is the time to consider Long-term Health Care

When considering long-term health care, what should you consider? A long life? Consider this: If you’re 55 years-young now, your average life span is 82.5. If you’re 70 years-young, your life span increases to 86.3. To determine your life span, Social Security provides a calculator to estimate your remaining life span. https://www.ssa.gov/cgi-bin/lonetivity.cgi.

The Cost of Care

Fifty-two percent who reach 65 will require long-term health care. Think about that! It’s determined the average length of care of 2.5 years for women and 1.5 years for men. An insurance company, Genworth, determines 14% may require an additional 5 years.

I’ve spoken to allot of individuals living here at Phoebe Village in PA. They agree with Genworth their spouses live longer than the stats show, at least 59% do. The average is around 4.3 years, but some folks told me their spouses lived 10 to 15 years longer.

Let’s look at the costs of long-term health care. Currently, if you already have a policy, they last 3 years and pay $100 per day. Not bad, you say? Wait a moment. We’re just getting started.

Picture this. You’re 55 with a life span of 85 years. Assisted Living care for a male for 1.5 years at a current cost of $5,000 per month equals $90,000 for the year. For $90,000 this male would receive skilled nursing care for 6 months. Six months equals $11,500 per month which equals $69,000 for a grand total of $159,000.

Case in point: An individual I know pays $4,000 per month to live in an independent living section of a senior home community. His spouse’s monthly care for skilled nursing is $8,000 per month which equals $11,000 per month for one year which equals $132,000. You can sit down if you’re not already lying in a heap on the floor.

At age 70 and you have a six-figure plus income all your working life and you planned for your retirement with a financial counselor, guess what, you don’t have to sweat it. You’re in good hands with assets totaling over $600,000. However, note that your remaining assets will suffer a direct hit.

At age 70 and you’re in the lower middle-class or poor, under $50,000, the cost of long-term health care is paid by Medicaid after all your assets are spent down to $2,000.

At age 70 and you live in the middle-class, 50% with assets between $50,000 and $600,000 faces spending most of their saved income on long-term care.

Over a 30-year marriage (and counting), my spouse invested and saved over 1 million dollars. Guess what folks? It’s not enough money to pay for all of his health care needs especially if there are additional medical problems. Think about that as well!

Searching for that elusive policy

When you start looking for a good long-term health policy, certain criteria must be met. First, think about inflation. It does creep in from time to time. For example, if your spouse or relative is in the ages of 55 to 85 years-young, a 3% inflation rate might increase the average cost of $159,000 to $364,000.  Imagine a 2% increase in every year to 2047.

A typical policy today (2019) pays $200 per day for 2 years. For a man, the cost is $1,594 per year and for a woman, the cost is $2,070 per year. The maximum benefit would be $146,000. Under my spouse’s current policy (for 3 years), the pay-out would be $3,600. Just a drop in the bucket, folks!

My thanks to SCORE, a part of the U.S. Small Business Administration and to Reading Eagle Business Weekly for providing this information for this blog.