Do you Really Need Long Term Care?
Let’s begin this article with some other questions like, “do you need health insurance,” do you need car insurance,” or “do you need homeowners insurance?” The answer is no if you know that you are going to be healthy, you are never going to have an accident in your car, and your home will never be involved in a fire, flood, tornado, and/or any other type of disaster. As I tell my clients, “if you can correctly predict the future, then I can prepare a perfect financial plan for you.”
Of course none of us have that gift. So preparing for the worst and sharing the financial load with millions of other people is the way to plan for these catastrophic events. So goes long term care (LTC). I just completed my continuing education requirements for LTC and have recently visited with some of my friends in long term care facilities. I thought that this would be a good time to bring our readers up to date on one of the most financially destructive events that can happen to us. Long term care doesn’t have to affect us directly. Many of us will help or be responsible for our parents, other family members, or spouses. Waiting to see what happens can be a costly decision.
There are lots of ways to plan for LTC in your portfolio. You can opt for the traditional method of buying a LTC policy for yourself or your loved ones. Many insurance companies offer life insurance policies that pay for your LTC through the early disbursement of the death benefit and there are now annuities that will pay part or all of your long term care for a set period of time. There’s also a method that uses Medicade to pay the nursing home. Here are some Long Term Care statistics from a recent Morningstar article that will help you understand the problem: *15 million: The number of Americans expected to have a high long-term care need by 2050. *$30 billion: Long-term care expenditures in U.S., 1980. *$225 billion: Long-term care expenditures in U.S., 2015.
*57.5%: Percentage of individuals turning 65 between 2015 and 2019 who will spend less than $25,000 on long-term care during their lifetimes. *15.2%: Percentage of individuals turning 65 between 2015 and 2019 who will spend more than $250,000 on long-term care during their lifetimes. *62.3%: Percentage of long-term care services and supports that are provided through Medicaid.*20%: Percentage of Medicaid funding that went to pay long-term care costs in 2016. *$120,900: Maximum amount of assets that a healthy spouse can retain for the other spouse to be eligible for long-term care benefits provided by Medicaid, 2017. (Actual amounts vary by state.)
*37 billion hours: The annual amount of long-term care provided by unpaid caregivers, 2013. *$470 billion: The dollar value of long-term care provided by unpaid caregivers, 2013. *$3 trillion: Estimated lost lifetime wages due to unpaid caregiving responsibilities. *83%: Percentage of help provided to older adults that is delivered by friends or family members. *46%: Percentage of all caregivers who provide help to someone with Alzheimer's or dementia. *$230.1 billion: Value of assistance provided by unpaid caregivers to people with Alzheimer's or dementia, 2016. *65%: The percentage of older adults with long-term care needs who rely exclusively on friends and family members to provide that assistance. *More than 75%: Percentage of caregivers who are women. *63: Average age of caregivers for people who are 65 and older. *70%: The percentage of caregivers who suffered work-related difficulties due to their caregiving duties. *$15,000: The average amount of income that caregivers will lose due to time demands of providing care to those with Alzheimer's or other dementias.
*4.50 million: Number of individuals with long-term care insurance coverage, 2000. *7.25 million: Number of individuals with long-term care insurance coverage, 2014. *$1.98 trillion: Maximum potential benefit of all long-term care policies in force today.*$1.87 billion: Annual claims on long-term care insurance policies, 2000.*$8.73 billion: Annual claims on long-term care insurance policies, 2014.*99%: Percentage of new long-term care policies that cover nursing home and in-home care, 2014.*37%: Percentage of new long-term care policies that cover nursing home and in-home care, 2000.*$2,772: Average annual premium, long-term care policies being sold, 2014.
Which method is best for you? My suggestion is to seek the advice of a CFP® professional and let them help you. The CFP® designation assures you that you are working with a professional who must adhere to a code of ethics, regularly take continuing education on a variety of investment topics, and keep your best interest at the forefront. This article was written by Joe Psalmonds CFP® To learn more, call 318-222-8999, or send us a message by clicking the contact us link.
Source: http://www.morningstar.com/articles/823957/75-mustknow-statistics-about-longterm-care.html