By The Numbers…

Like stats and facts? I must admit that I do. Here are some numbers that might take your breath away or at least give you cause to pause:

  • The government projections are by the time we reach age 65 that 70% of us will need some level of long-term care in our remaining years. The risk is huge!
  • Most of us think of long-term care as an end of life issue for the elderly. Currently, 43% of those receiving long-term care in our country are working age adults and the primary reason for their care is motor vehicle accidents. The need for long-term care could occur at any time in our lives.

The risk of needing long-term care is huge and it’s expensive!

  • Long-term care is expensive! The national median cost of a private room in a nursing home is $8121 per month or $97,455 annually. Twenty years from now the cost is projected to be $14,667 per month or $176,015 annually.

Can you afford to self-fund this expense? Check out the cost of care venues where you live. Costs have increased by 4.5% across all care venues.

Could you afford to self-fund the cost of long-term care?

  • For most Americans there are just three funding options for long-term care expense: 1) self-fund using income, savings or liquidating investments to pay for care, 2) transfer the risk to an insurance company or 3) qualify for government assistance through Medicaid by conforming to income and asset requirements.
  • We read a lot about retirement preparedness today. The latest National Retirement Risk Index reported that 52% of households were at risk of being able to maintain their standard of living in retirement.

The risk of needing long-term care is high and it’s expensive. Yet, less than 10% of Americans age fifty and older own long-term care insurance!

  • According to the Social Security Administration a man reaching age 65 today can expect to live to age 84.3. A woman turning age 65 today can expect to live to age 86.6.

Those are averages. Twenty-five percent of people 65 today will live past age 90 and 10% will live past 95. You can figure your life expectancy at www.livingto100.com.

It may seem counter intuitive, but the longer we live the greater the chance that we will need long-term care.

  • Many people mistakenly think that Medicare covers long-term care. That’s probably because prior to July of 1998 it did cover long-term care on a fee for service basis. But when the Balanced Budget Act was passed in 1997 – 21 years ago – the rules changed.

Today, Medicare will cover up to 100 days of custodial care providing certain requirements are met. One is that a beneficiary must be admitted to a hospital for at least three days. Here’s a wrinkle. Being held for observation will not trigger Medicare coverage. The beneficiary must be admitted.

Another requirement is that the beneficiary must need skilled care provided by medical professionals every day.

Claims history tells us that on average Medicare pays for about 25 days of custodial care because most beneficiaries have rehabbed or cured within 20 to 25 days and no longer require skilled care daily.

In our sixties only about 20% of us require assistance. But by age 85 most of us need help and our first choice is a family member. Usually this is an adult child who on average devotes 77 hours per month to care-giving.

Do you really want to rely on family to provide long-term care?

The SCAN Foundation reported that unpaid family members provided the equivalent of $450 billion of the $725 billion spent on long-term care in 2014.

A MetLife Mature Market Institute research study reported a quarter of adult children, primarily baby boomers, provide personal care or financial assistance to a parent.

The estimated total of lost wages, pension and Social Security benefits of these caregivers is nearly $3 trillion.

The cost impact on individual female caregivers averages $324,000. For men it is $284,000.

So depending on adult children to provide care can have a pretty significant impact on their future financial security.

Dementia tops the chart

The number one cause for long-term care insurance claims is dementia, including Alzheimer’s, which now afflicts 50% of the population over 85. It is what many of our clients fear, especially if they’ve experienced dementia with a family member.

Today, 5+ million Americans are afflicted and it is anticipated that number will grow to 15+ million as baby boomers age barring no breakthrough in treatment or prevention.

By 2050 the cost of care for dementia sufferers is projected be $1.1 trillion annually. The cumulative costs between now and then are estimated to top $20.8 trillion. Yet less than half of every cent spent on care is spent on research. Upside down priorities?