As one ages, the reality of requiring long-term care becomes increasingly significant. Understanding the nuances of long-term care and preparing for it financially is essential for maintaining your quality of life and protecting your assets. This blog post will help you understand the different models of care under the long-term care umbrella, explore various planning solutions, and recognize the need for advance planning.
- Understand Long-Term Care
Long-term care refers to a range of services and support one may require to meet their personal care needs over an extended period. This type of care is not solely medical in nature and often includes assistance with basic personal tasks of everyday life, such as bathing, dressing, and eating--sometimes referred to as Activities of Daily Living (ADLs). The models of long-term care include:
- Assisted Living Facilities: These are for individuals who require assistance with ADLs but do not need around-the-clock medical care. They offer a combination of housing, personal care services, and some health care.
- Nursing Homes: These provide more comprehensive care, including 24-hour medical supervision, along with assistance with ADLs.
- Skilled Nursing Facilities: These are for individuals who require a higher level of medical care, often following a hospital stay. They provide comprehensive nursing care and rehabilitation services.
- Explore Diverse Planning Solutions
Traditionally, long-term care insurance has been the go-to solution for many when planning for future care needs. However, this is not the only option available. A more comprehensive approach to planning for potential long-term care needs may include:
- Self-Funding: This involves setting aside a portion of personal savings specifically for long-term care. This option requires substantial financial resources and careful planning to ensure that the funds are sufficient over time.
- Asset-Based Strategies: These strategies involve using existing assets or insurance to fund long-term care that may include some return of premium if benefits are not used and a guaranteed premium.
- Life Insurance with Long-Term Care Benefits: Some life insurance policies now offer riders that provide access to the death benefit while living for long-term care expenses. These can be a flexible and potentially more cost-effective way to plan for long-term care needs.
- The Reality of Long-Term Care: A Statistical View
The need for long-term care is more common than many might think. On average, a stay in a nursing home or assisted living will last about 2.5 years1. For an average 65-year-old couple, there's a 75% chance that one spouse will require long-term care, according to HealthView Services2. These statistics highlight the importance of planning for long-term care to mitigate the financial and emotional stress it can create. Unfortunately, many individuals begin planning for their own long-term care only after witnessing the cost of an aging parent’s care. There’s not a one-size-fits-all timeframe, but it can be beneficial to start thinking about your own long-term care planning around age 55.
Early and informed planning can make a significant difference in managing the complexities and costs associated with long-term care. Contact your Baird Advisor today if you would like to begin long-term planning for yourself or a loved one, or review a strategy that you may already have in place.
- https://files.asprtracie.hhs.gov/documents/aspr-tracie-ta-long-term-care-statistics-6-27-17-508.pdf
- https://www.thinkadvisor.com/2021/06/22/what-are-the-odds-your-client-will-need-long-term-care/#:~:text
Andrew Boyles
VK2024-0110