Most of the time when people hear long-term care they think, of insurance or nursing homes.
So let’s start by clarifying…..
Long-term care is simply, chronic care (as opposed to acute care). The chronic distinction is important because medical insurance and Medicare only cover acute care. The only insurance that covers chronic care is Long Term Care insurance.
Nursing homes are one of many options of WHERE you are receiving care and insurance is one of many options of how you PAY for care. The long term description describes the duration for which care is expected to be needed.
Now, what does that kind of care look like?
When it comes to practical matters there are usually three ways it unfolds:
- You live a long life and become frail over time. In your 60s, 70s, and for some, well into your 80s, you may continue to travel, hike, and otherwise be active. As you get into your late 80s and 90s, most of us slow down and eventually need help. Usually, the help starts with making sure the trash gets taken out and the gutters of our homes are cleaned (non-medical care). At some point, we may not have the energy to cook our own meals or feel safe driving ourselves around. This generally progresses until we need help getting in and out of bed, in and out of the shower safely, regulating our medication, etc. (medical care)
- You are diagnosed with cognitive impairment, Alzheimer’s, or Dementia, and need supervision. This route can happen at any age but often occurs in people who are physically capable but cannot safely navigate the world without help. They may wander out of the house or leave a stove on all day.
- A severe accident or diagnosis. The high-profile cases like Christopher Reeves or Maria Shivo come to mind. My father, who was diagnosed with cancer in May of last year and died in September also falls into this category. A medical event occurs and the prognosis is that recovery is unlikely and what seems like overnight, one goes from needing no care to needing significant care.
The majority of us will need long-term care, and the longer we live, the more likely we will need it.
- 52% of people turning 65 today will need care
- 1 in 3 people 85 years or older have Alzheimer’s
And it’s not inexpensive.
According to Genworth’s cost of care survey 2018: in Seattle, the average annual median cost of in-home care was $80,034, and a private room in a nursing facility was $143,445. You can play with their calculator here: Genworth
It is an often overlooked area of personal finance to have a plan for care.
It doesn’t have to be complex, start by asking yourself (or your parents), if I (or you) live to 95 and need care:
- Where do I want to receive care? – the default answer tends to be at home, think through what that may look like, things at home that seem easy today, aren’t so easy when we become frail (think doorways, stairs, and showers)
- Who will provide it? – the default answer here tends to be spouse or child, but caregiving is a large responsibility that often overtakes any other role of your family member. So to keep your spouse or child, your spouse or child, think critically before appointing them your caregiver and plan for their needed help caring for you
- How will I pay for it? – there are only 3 options: private pay from your assets or income, insurance, or Medicaid (which only covers the impoverished)
Hope this provides a little structure to your decision-making. Please schedule a time to meet with us if you want more help with incorporating a long-term care plan into your financial life.
Feel free to forward this to your family members as a way to open this conversation with loved ones. Keep in mind that these decisions can and do evolve over time, so let go of the idea that a plan will develop after one meeting or conversation.
Lastly, if you are curious like me, here’s a fun article that describes how other countries handle this challenge, I’m a big fan of the Netherlands/college student plan here: https://arosacare.com/senior-care-around-the-world/
Be kind to yourself and others,
Investment advice offered through WCG Wealth Advisors LLC, a Registered Investment Advisor. Utor Wealth is a separate entity from WCG Wealth Advisors and The Wealth Consulting Group.