Long Term Care: Costs and Financial Solutions
Long term care encompasses a diverse range of services tailored to people with various personal care needs. It is not a single type of service. As a medical service, long term care provides assistance to those with chronic illnesses or disabilities. It also supports individuals who cannot perform basic tasks essential to daily living.
Activities of Daily Living (ADLs) include tasks such as eating, dressing, bathing, getting out of bed, and using the toilet. For those aiming to live independently despite declining health, long term care may also cover Instrumental Activities of Daily Living (IADLs). These include cooking, shopping, managing money, and taking medications.
Understanding the cost of long term care is vital for seniors and those nearing retirement. In 2015, approximately 16.7 million people received some form of paid long term care. By 2050, this number is expected to surpass 27 million. Nearly seven out of ten people may need assistance with ADLs.
Long term care is expensive. In 2012, Americans spent $219.9 billion on long term care, accounting for 9.3% of total personal healthcare spending. This figure is projected to rise to $346 billion by 2040.
Several popular forms of long term care exist, each with its own costs and funding methods. Family caregivers, who are usually unpaid relatives or friends, provide a significant portion of care. In 2015, nearly 66 million family caregivers assisted those unable to function independently.
Despite being unpaid, family caregiving holds substantial value. In 2013, AARP estimated that 40 million family members had donated 37 billion caregiving hours worth $470 billion. This amount exceeds total Medicaid spending for that year.
Adult day care services offer social and health services in a community setting, providing respite for family caregivers. The median national cost for adult day care is $70 per day. Home Health Agencies (HHAs) cater to those wishing to live independently while requiring professional care.
HHAs provide skilled nursing services supervised by medical doctors or registered nurses. They address various medical needs, including pain management, medication management, injections, and catheter changes. Additionally, HHAs offer therapeutic services like physical therapy and speech therapy to help individuals resume ADLs.
Non-medical services, such as “home health aids,” assist with ADLs but do not provide medical care. Known by various titles like “companion services” and “personal care assistants,” these services are paid out of pocket. The median national cost for these services is $131 per day, or $47,934 annually, with geographic variations.
Assisted living facilities are suitable for individuals needing help with ADLs but not requiring intensive medical care. Many choose assisted living when living alone becomes impractical. The national median cost for assisted living is $45,000 annually, with state-specific rates varying widely.
Nursing homes provide extensive care for those seriously ill or disabled. The care level, determined by a physician, may include ADL assistance and medical supervision. For severe cases, skilled nursing care and 24-hour supervision are required. Nursing home costs are among the highest, with a median national rate of $85,775 annually.
Hospice care serves individuals with a life expectancy of six months or less. The goal is to provide a comfortable, pain-free end of life. Medicare or Medicare Advantage plans cover most hospice costs, including pain relief treatment and care related to terminal conditions.
Financing long term care involves various options. Personal savings and retirement funds may not suffice. Long term care insurance can cover some costs, while government programs like Medicaid and Medicare offer additional assistance.
Medicaid, a federal program for low-income individuals, covers medical and long term care services but has strict eligibility requirements. Meanwhile, Medicare offers limited long term care coverage, mostly for skilled nursing services, home health care, and hospice care.
Annuities provide regular income in exchange for premium payments. Immediate annuities assist those already needing funds for long term care. Deferred annuities build funds for long term care and other uses, often funded by transferring savings or retirement accounts.
Life insurance policies can be converted to cash through life settlements. Selling a life insurance policy allows access to funds for long term care. The payout depends on the policyholder’s age, health, and policy face value.
We understand the challenges of financing long term care. We offer services that enable policyholders to sell their Term Life Insurance Policies for immediate cash. This flexibility can help address immediate financial needs, especially during critical times. Contact us to explore how we can assist you in meeting your long term care and financial goals.
