One in five Americans is a caregiver, according to a 2020 report by AARP, which illustrates how many retirees require help in their homes. According to the U.S. Department of Health and Human Services, more than 70% of seniors will need long-term care at some point.

Despite the fact that so many retirees need some long-term care services in retirement, very few have a plan in place. This lack of planning impacts one’s finances but can put family caregivers in a tricky position. Most long-term care services are provided informally and in an unpaid setting. Without proper retirement planning, longꦦ-term care is often shifted on🐈to family members.  

The Complexities of Long Term Care

Setting up a long-term care plan 🍎isn’t just about budgeting for expenses or funding the risk through a product like long-term care insurance. To properly plan for long-term care, savers need to decide how they want to get care, the type of care they want to receive, who will provide that care, grant permission for family members to provide care, and develop a way to finance the costs. 

Far too many people think that all there is to a long-term care plan is traditional long-term care insurance. As a result, many people who decide that traditional insurance products are a poor fit disregard further planning and miss out on many other pl﷽an🐈ning options and benefits.  

Impacts on Caregivers 

The impact on caregivers reaches beyond finances. AARP's research shows that caregiving impacts the carer's physical, emotional, and financial health. The effects are intensified when the care recipient requires more help with activities of daily living (ADLs), more hours of care per week, or lives with the caregiver.

Caregivers who had no choice but to assume the role were more likely to report having difficulty taking care of their own health (31% vs. 14% of those who had a choice). Lack of planning increases the chances that unprepared family members will be 澳洲幸运5官方开奖结果体彩网:forced to take on a caregiving rol♎e. According to the AARP, making plans about future eldercare like financial needs, living arrangements, and decisions about healthcare isn't prevalent in American households. Just 44% of Americans report their recipient has these plans in place, and only 45% of caregivers have their own future care plans in place.

Quantifying the Costs of Long-Term Care 

The cost of long-term care varies by geographic area. For example, data from the National Council on Aging shows that nursing home costs average $6,996 per month in Arkansas and $18,706 per month in Alaska. Even within the same state, costs vary; nursing home care in San Francisco costs over $3,000 more per month on average than the same care in Bakersfield, California ($12,471 vs. $9,095).

Research can help provide a baseline idea of what care might cost in an institutional or professional setting. In most instances, however, responsibility for providing care still falls to spouses 💝and children. As you develop a long-term care plan, make sure you consider the negative financial impacts this might have on them. Consider: Will your family caregiver have to leave the workforce? Will they have to pay for certain expenses out-of-pocket? Your plan may include setting aside funds to offset lost wages or out-of-pocket costs for your family caregiver to help relieve their financial strain.  

Funding for Long-Term Care 

There are a variety of ways to fund the cost of long-term care. ☂;The most obvious choice is to self-fund. This means you set aside thꦑe projected costs in investments and savings, likely as part of your retirement planning.  

Second, you can opt to use traditional long-term 🐈care insurance, which can be extremely beneficial when used for covering the high costs of a full-time nursing home. Long-term care insurance can be tailored to specifically cover these types of costs, while other funding sources might fall short. However, be aware that ongoing premium payments can rise over time, making it hard for some individuals to afford the coverage throughout retirement.  

Finally, newer products called asset-based or hybrid policies combine features of traditional long-term care insurance and 澳洲幸运5官方开奖结果体彩网:life insurance into one policy. Hybrid policies can be more affordable and are guaranteed to provide🦂 either a life insurance benefit if you don’t need long-term care or provide coverage if you need long-term care services.  

Medicaid and Long-Term Planning

One additional option is to rely on the benefits provided by Medicaid. However, in order to qualify for Medicaid, the individual needs to substantially spend down their assets. Me𝔍dicaid also typically leaves the individual with less controꦦl over the type of care they receive because Medicaid only covers limited services and not all facilities accept Medicaid. 

Frequently Asked Questions (FAQs)

The Bottom Line

Planning for long-term care gives your caregivers permission to make decisions a🧸nd spend money to get you the care you need. Without setting up a plan ahead of time, family caregivers must find solutions and funding as they go. 

Transferring some portion of the financial risk to an insurance company provides peace of mind, instant liquidity, financial leverage, and tax advantages. Many policღies also offer care coordination services. However, a properly set up plan is not all about the specific product or funding mechanism you utilize, but instead about your quality of life and the family caregivers yo☂u are protecting.