Why You Need Long-Term Care Insurance

Table of Contents:

  1. What Does Long-Term Cost?
  2. How to Keep Long-Term Costs Down

Healthcare is the one expense that tends to catch seniors off-guard. Cost projection software provider HealthView Services estimates that the average healthy 65-year-old couple retiring today will spend $387,644 on medical care in retirement. This figure, however, doesn’t account for long-term care.*

Long-term care is a catch-all term that covers services like home health aides, nursing homes, and assisted living facilities. It’s estimated that 47% of men and 58% of women who reach age 65 will need some amount of long-term care in their lifetime.**

Here’s the bad news: Not only can long-term care be prohibitively expensive, it’s also not covered by Medicare. Most long-term care services fall under the umbrella of custodial care — care needed to perform everyday living tasks. Medicare will only cover long-term care that’s medical in nature, which means a large number of seniors who need long-term care will ultimately find themselves out of luck. However, if you secure long-term care insurance, you’ll have help covering these exorbitant costs.

What Does Long-Term Cost?

According to Genworth’s 2019 Cost of Care Survey, the average annual cost of long-term care currently looks like this:***

  • $52,624 for a home health aide
  • $19,500 for adult day health care
  • $48,612 for an assisted living facility
  • $90,155 for a shared nursing home room
  • $102,200 for a private nursing home room

Unfortunately, these are just averages. In some parts of the country, these numbers can climb much higher. That’s why it’s crucial to secure long-term care insurance, particularly if you don’t have family on hand to step in and provide care for you later in life. Even if you do have family members who are willing to step up, it’s important to recognize the burden caregiving can put on loved ones. However, with the right long-term care policy, that won’t be necessary.

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Of course, long-term care insurance isn’t cheap. The American Association for Long-Term Care Insurance reports that the average annual premium for a 55-year-old couple is $3,050. It’s possible to snag a lower premium, but that could come at the expense of reduced coverage later in life.

How to Keep Long-Term Costs Down

Still, there are ways to keep your long-term care insurance costs down while retaining decent coverage. For one thing, apply early. You’re more likely to get a long-term health-based discount on your premiums if you apply in your early-to-mid-50s, as opposed to your late 50s or 60s. In fact, if you wait too long to apply for long-term care coverage, you’ll risk getting denied completely.

Also, choose the terms of your policy wisely. If you opt for a longer elimination period, which is the number of days between when you’re eligible for benefits and when your policy kicks in and starts paying, you might spend a bit more once that care becomes necessary, but you’ll lower your premium costs. Also, if you stick to a shorter benefit period, you’ll save money on premiums, as well. For the typical senior, a three- to five-year benefit period will suffice.

Though long-term care insurance isn’t for everyone, it’s wise to at least explore your options for coverage. Doing so could save you a world of financial stress down the line.

* Anonymous, (2019). Why Health Needs to be Part of Retirement Planning HealthView Services. Retrieved October, 2019
** Anonymous, (October, 2018). Long-Term Care Statistics You Need to Know in 2018. LTC Consulting Services. Retrieved October, 2019
*** Anonymous, (2019). Cost of Care Survey 2019. Genworth Financial. Retrieved October, 2019
**** Anonymous, (2019). 2019 Long-Term Care Insurance Price Index Released. American Association for Long-Term Care Insurance. Retrieved October, 2019