Each November, advocates across the country use Long-Term Care Awareness Month as an opportunity to educate families about of the importance of planning for long-term care needs and how solutions like long-term care insurance (LTCI) can protect their health and finances in their later years. For many, the first step in learning about these solutions involves shedding light on common myths and misconceptions about LTCI.
Myth 1: There’s a government program that will take care of me. Medicaid is a government program that will pay for certain long-term care services. However, eligibility for Medicaid requires that you meet state-specific poverty guidelines. Medicare, on the other hand, is a senior health insurance plan that covers skilled care designed to improve an individual’s health condition. It does not cover custodial care, meaning the kind of care you get when you need long-term care.
Myth 2: I can save the money I need for long-term care. This is not a practical approach for most individuals. Paying out of your own pocket for just a few years of long-term care can deplete a lifetime of savings and threaten the retirement you spent decades building. The national average annual costs for long-term care services are: $21,840 for care at home (based on a four-hour visit, five times a week); $39,500 for care in an assisted living facility; and more than $83,000 for care in a nursing home, according to the National Clearinghouse for Long Term Care Information. For this reason, many financial planners and advisors consider LTCI an integral part of an individual’s financial plan.
Myth 3: LTCI is only for old people. The earlier you start planning for your long-term care, the better. Applying for coverage at a younger age will help make LTCI more affordable and provide more coverage options (the average age for new LTCI applicants is 57). Additionally, accidents and chronic illness can happen at any age and can include the need for extended custodial care.
Myth 4: I don’t need LTCI because I have health insurance. Long-term care is the assistance, care or services a person needs when they are unable to perform basic activities of daily living—such as bathing, dressing or eating—a need which often grows over time. This type of care is not covered by health insurance plans, which are designed to cover skilled or acute care needed to return someone to good health (think care vs. cure). Therefore, long-term care generally focuses more on caring than on curing.
Myth 5: I can’t afford LTCI. Without insurance, you may have a harder time affording long-term care services. Many LTCI plans can be designed to fit a range of personal budgets and benefit levels to fit personal needs. Having some protection from the financial demands of long-term care is better than having none—it doesn’t have to be an all-or-nothing decision.
Myth 6: LTCI only covers care in a nursing home. LTCI can provide benefits for care in the following settings: your own home, adult day care, hospice care, assisted living facility or a nursing home.
Myth 7: We don’t need LTCI because we have each other. Family and friends certainly play an important role in long-term care situations—according to AARP, more than 42 million Americans provide care to an adult with limitations in daily activities. This care, when prolonged, can result in significant strain on the caregiver—physically, emotionally and financially. LTCI can help support and supplement such informal care, as well as ensure care is received if a spouse or family member isn’t physically capable of providing care.
Waiting too long to address your long-term care needs can have serious consequences. I encourage you to take the next steps to learn more about how LTCI and other resources can protect your finances, give you peace of mind, and, if needed, provide the care you need. Then begin the important discussion with your loved ones to see if LTCI is the right solution for you and your family.