Failing to plan for long-term care expenses may leave aging men and women with little or no assets late in life. AARP says that the cost of long-term care continues to rise and the array of options can make it difficult for families to find the best, most affordable care.
The median monthly costs for a semi-private room in a U.S. nursing facility hovered around $6,800 in 2016, according to The Genworth Cost of Care Survey. That adds up to roughly $82,000 per year. Individuals who only anticipate hiring a home health aide should know that such options cost an average $3,800 per month.
Retirement savings can quickly dry up when long-term care is required. Individuals need to keep in mind that, in 2014, the Social Security Administration said the average month retirement income from Social Security was just $1,294. The National Care Planning Council says that at least 60 percent of all individuals will need extended help during their lifetimes.
Ongoing care can last for many months or years. Long-term care needs, including assisted living and nursing home stays beyond a few months, may not be covered by federal health insurance programs, such as Medicare. As a result, it is up to individuals to find ways to finance their care.
Long-term care insurance
Long-term care insurance is one of the ways to offset costs of care for later in life. But many people are unaware that this type of insurance exists. A survey conducted by Leger Marketing for the Canadian Life and Health Insurance Association found that 74 percent of respondents said they haven't included provisions for long-term care in their retirement plans.
Long-term care insurance is a safety precaution that can be purchased early in life to plan to help pay for expenses aging men and women may incur in their golden years. New York Life Insurance says that policy holders will be reimbursed for qualified long-term care costs up to a maximum daily benefit amount. Coverage varies, but policy premiums generally increase with the age of applicant.
Government aid is available for U.S. and Canadian residents but qualifications vary and it is usually limited to those with financial hardships. Medicaid pays for the largest share of long-term care services in the United States, according to the Administration on Aging. But to qualify, one's income must be below a certain level and the person must meet minimum state eligibility requirements.
Canadian provinces will assess one's ability to pay and may subsidize care costs. Also, there may only be a handful facilities supported by the government, so applicants cannot be picky about accommodations.
Financing long-term care is something individuals must consider as they make their plans for the future. It is a large expense that cannot go unaddressed even though the need for care might be in the distant future.