Should I Get Long Term Care Insurance?

This is one area of our practice that we get a lot of indecisive moments about because most clients aren’t sure if it is worth the premiums to plan ahead for care – what if they end up not needing it? It can be a difficult decision to make for many, so we have written this guide to help provide more information during your decision-making process.

  1.    The Average Annual Cost of Long Term Care

The national average cost of a private room in a care facility is around $90,000 per year and assisted-living facilities average around $41,000. If you prefer to stay at home, the national average pay for in-home care is $19/hour. Now, you do have to take into consideration that living in a long-term care facility likely means that you are no longer able to live at home or take part in recreational activities like you once did. This means that your annual expenses for food, homeownership, travel or other recreational activities will decline while at a long-term care facility. The cost of these expenses can be applied to your long-term care costs, significantly reducing your out of pocket cost of care.

  1.   Estimating the Likelihood of Needing Long Term Care

Long Term Care is defined by insurance companies as care performed when one of the following circumstances are met:

  • The inability to perform 2 to 3 specific “activities of daily living” without help. These include bathing, dressing, eating, toileting, and “transferring”, or being able to move from place to place or between a bed and a chair.
  • Cognitive impairment such as from a stroke, Alzheimer’s, or Parkinson’s disease. It is important to note that other forms of mental incapacity may be excluded.
  • A licensed medical doctor determines that long-term care is necessary.

Estimating if one of these scenarios will happen to you at some point in your life can be one of the hardest things to do, as no one can be perfectly sure if or when their health will decline to the point of needing long term care. Factors to consider are:

  • Family history,
  • Your current health,
  • Current lifestyle habits, and
  • Whether or not you have a spouse or children to help care for you from home.  

Overall, 44% of men and 58% of women over the age of 65 will need some type of long-term care. Long term care does not have to be a permanent status; of those who need long-term care, 50% of the men and 40% of the women only needed care for 100 days or less.

  1.    Financial Status

Individuals who are financially well off may not need to purchase Long Term Care Insurance if they are able to create a trust to disperse funds when necessary for their long-term care. Others who are not as financially sound can qualify for Medicaid to rely on. Medicaid will cover the full cost of a skilled nursing facility for 20 days and a percentage of costs for continued care from 21 days up to 100 days of care.  For those who require care longer that 100 days, the cost would come out of pocket  from a previously establish trust, your current assets, or from Long Term Care Insurance.

  1.  Make an Informed Decision

After considering your risk for long-term care and your financial standing you will need to decide which side of the “44% of men and 58% of women over the age of 65 who will need some type of long-term care” you are on and if you think it will require longer than 100 days of care. You can always discuss your situation with one of our knowledgeable insurance agents to see if Long Term Care Insurance will be the right fit for you.