The U.S. Department of Health and Human Services (HHS) cites that almost 70 percent of American retirees will need some long-term care (LTC). Median annual costs for these services range from $53,768 to $105,850. Also, HHS reports that Medicaid-financed nursing home care recipients will spend more time in residence than those who self-finance their care or use private long-term care insurance. Therefore, these long-term care services and supports (LTSS) grow more critical as retirees live longer and face the possibility of outspending assets.
Affording Long-Term Care
Paying for long-term care planning remains a significant challenge for most older Americans. However, preparing for service payments often proves tricky. LTC insurance may cover all or a portion of services. Also, premiums depend on a person’s age, gender, health, location, and other criteria. Thus, the American Association of Long-Term Care Insurance lists 2021 average premiums for initial benefits of $165,000. This represents a 1 to 5 percent annual growth rate for a healthy 55- year-old male. Finally, average payout runs $1,375 to $3,685 per year. For the same coverage type, a healthy 55-year-old woman often pays between $2,150 and $6,400. Costly premium hikes result from outdated insurance industry metrics.
What is Hybrid Long-Term Care Coverage?
A different payment option is hybrid long-term care coverage. These policies are part annuity or life insurance and part long-term care coverage. You may purchase a policy upfront. Doing this eliminates future risk of premium increases. Also, heirs may receive a death benefit if the covered does not need long-term care. This option is an arbitrage approach. Hybrid policy price comparisons are more difficult to ascertain than a standalone long-term care coverage policy.
Using a Health Savings Account to Pay for Long-Term Care
Typically, family members play an important caregiver role relative to loved one’s Activities of Daily Living (ADL). This statement rings most true in the earlier stages of care. At this stage, someone requires help with just one ADL. Then, in-home assistance, community programs, and residential facilities help loved ones stay active as long as possible. The family-style approach constitutes most living arrangements for long-term care recipients.
Available Resources
Many available resources help older adults reside in-home and participate in their communities. Alternatively, the stay-at-home option in the earlier stages may prove the most viable and cost-effective. Pivoting to in-home service provision is the most likely scenario for most American retirees. Nursing home residential space is expensive. Also, Medicaid supplies limited aid. While most LTSS stays remain paid care and have relatively short durations, the lifetime risk for expensive out-of-pocket costs runs high.
Planning for LTC
Unfortunately, LTSS care distributions among the U.S. population vary greatly. Generally, people with limited education and less financial resources often experience severe LTSS needs. However, over a lifetime, the more well-educated population may outlive their assets. Ultimately, family is an integral part of the solution for LTC. Further, the federal government responds to the growing need to offer affordable care. For your best outcome, proactively plan. Most Americans will need LTSS, but few take steps to plan for it.
About Skvarna Law Firm in Glendora and Upland, California
Let a skilled attorney assist with your estate plan. Contact us today to learn about your options (909) 608-7671. We operate offices in Glendora and Upland, California. We provide legal services for individuals living in San Bernardino, Los Angeles, Orange, and Riverside Counties. This includes the cities of Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Montclair, Pomona, La Verne, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
