What is Long-Term Care?

Long-term care is the assistance people need with the daily activities of living, such as bathing, eating, dressing, moving about, and personal hygiene.   It is called “long-term” because people usually need the assistance for several months or years. 

Long-term care is generally not medical care, but is designed to help people maintain their independence and quality of life for as long as possible.  It is a key part of helping older and disabled individuals remain in their own homes.

Most people need long-term care when they get older, usually in their mid-80s, but many younger people also use long-tem care services because of a serious illness or injury.

You probably know someone who has needed long-term care.  If so, you have seen what this need does to the person receiving care and also to their friends and family.  A long-term care event affects everything in a family, as relatives must change their work schedules, life styles, and leisure activities to help a family member who can no longer care for themselves. 

A long-term care event can cause stress and conflict in a family, as brothers and sisters argue over sharing expenses and chores to care for a parent.  Many painful decisions must be made about where the parent will live, who will care for them, and where the money will come from.

How Likely Is It that You Will Need Long-Term Care?

The need for long-term care is a good news/bad news scenario.

• The good news is that we’re living longer and often in much better health than previous generations. (1) Today, the average American lifespan is 77.9 years.   And, if you live to age 65, your life expectancy is about another 18 years or to age 83. (2)
• The bad news is that the longer we live, the more likely we will need long-term care at some point in our future. (3)

According to recent studies, there is over a 50 percent chance that an individual will need long-term care sometime in their life. (3)

• For men who reach age 65, there is a 50 percent chance that they will need long-term care.

• For women who reach age 65, the odds are even higher:  over 75 percent of them will need long-term care.

There are few things in life that are this likely to happen to us.  Of all the risks we buy insurance for, only life insurance has a higher likelihood of being needed.

Think about fire insurance on your home or collision insurance on your car:  there is far less chance that you will need those policies than there is that you’ll need long-term care, and long-term care services can cost more than either a car or a home if you have to pay for them yourself!

How Much Does Long-Term Care Cost?

The cost of long-term care services varies by geographic area and by type of service.  Today in most parts of California, full-time long-term care assistance costs about $73,000 per year. (4)  The national average is about $69,000 for semi-private nursing home care and $56,000 for eight hours daily of home care. (4) That is a huge expense if a family has not planned for it, and can cause tremendous stress and conflict in a family, as parents’ savings and investment accounts must be used up and homes and possessions must be sold to pay long-term care expenses.  It can be distressing for children to see their hoped-for inheritance used instead to pay for their parents’ long-term care.

But today’s costs are not the real issue:  if you’re in your 50s today, the costs you need to be concerned about are those when you’re likely to need care in your 80s.   At the current medical inflation rate of five percent per year, (5) the annual cost for long-term care when you’re in your mid-80s could be between $225,000 and $300,000! 

And, to date, most people need care for three to five years (6).  That means you’re looking at expenses of $675,000 to $1.5 MILLION dollars by the time you need care.

• Where will the money come from?

If you’ve been saving and investing in order to have a great retirement, you could be putting all or most of your assets at risk if you need long-term care.   It’s important to protect your retirement assets and income by planning ahead and purchasing long-term care insurance while you can qualify and when you can purchase it at reasonable rates. 

Two-thirds of those who purchase long-term care insurance today are under age 65. (7)  They understand how important it is to include long-term care protection in their overall retirement plan.

Long-term care insurance will never cost less for you than it does today!

Are You a Planner or a Denier?

Understanding the risk of long-term care generally leads to one of two reactions:

• planning ahead to take care of yourself, or
• denying the risk and doing nothing.

If you’re someone who prefers to deny the risk and do nothing, you may want to stop reading at this point.

But if you’re a planner, someone who has taken steps to protect your own and your family’s future from financial and emotional risk, please read on.

Planning For Long-Term Care

Since it is so likely that you’ll need long-term care, how can you take steps to protect yourself, to ensure you’ll get to live out your days with quality care, in the setting of your choice?

The vast majority of people (close to 80 percent) receive long-term care services in their own homes (6).  Most people want to stay in their own homes and remain in control of their lives for as long as possible.

• Long-term care insurance helps make this happen.

Some people think their health insurance, or MediCare or a MediCare supplement plan will pay for their long-term care, but that is not the case.  MediCare will pay for a limited number of days in a skilled nursing facility after a hospital stay, but that is not the same as long-term care, which often includes non-medical services.

The typical length of time a person needs long-term care services is three to five years. (6)  MediCare is not designed to pay for services that are not strictly medical expenses, and not for that length of time.

The MediCaid program does pay for long-term care services, but only after a person has spent down their assets to just a few thousand dollars.  At that point the person becomes a ward of the state, and they may not have freedom of choice about where or how they will be taken care of.

If you’ve worked hard and lived life independently, you are unlikely to be satisfied with this way of living out your older years.  Much better to plan ahead and be sure you’ll be taken care of in a way that lets you stay in control and keeps you from being a burden to your children or other family members.

Setting money aside now in a long-term care insurance policy will protect your future and will also be a huge relief to those who care about you.

Many adult children have said that the best gift their parents ever gave them was buying long-term care insurance for themselves.

How Does Long-Term Care Insurance Work?

Long-term care insurance provides you with a pool of money to pay for your long-term care needs when they arise.

Think of it as a separate account that holds money just for this purpose. 

Because of this, long-term care insurance protects your other assets, so you don’t have to use them to pay for your long-term care services.  Instead, you can use your retirement savings to travel, visit family, golf or engage in other favorite activities.  You’ll also have a better chance of having assets to leave to your children or charities important to you.

When you own a long-term care insurance policy, it is like getting your long-term care services at a huge discount.    The cost of premiums is small compared to the cost of paying for care yourself. In fact, in many cases, one year of long-term care insurance premiums costs less than one month of long-term care services would cost if you paid for them yourself.   Another way of looking at this is: if you own a policy, you could be purchasing your long-term care services at a discount of 80 to 90 percent.

It just makes good sense to start preparing for your future now by considering long-term care insurance for yourself and your spouse or partner.

And, most long-term care insurance benefits are received tax-free, when the policy is a qualified long-term care insurance contract under Section 7702 (b) of the Internal Revenue Code of 1986, as amended. *

Additional Benefits for Business Owners

if you own a business, there are additional advantages to consider when planning for long-term care.  If you cover at least three employees including yourself, you may be eligible for premium discounts and a simplified underwriting process.  That means it’s easier to qualify and you’ll get your policies quicker.

And, any premiums you pay for your employees will be tax deductible.  Your  own premiums may be fully or partially tax-deductible, depending on how your business is structured. 

*It is important to consult with your tax advisor regarding the specifics of tax deductibility.

You Could Try To Do It Yourself

If you decide not to buy long-term care insurance and pay for your long-term care yourself, how much money would you have to start setting aside today to make sure that you have $675,000 to $1.5 million by age 85?

If you are 55 years old, living in California,  and are earning 6% after paying taxes on your investments, on a lump sum basis you would need to set aside approximately $200,000 to $250,000 today.

If you want to save what you will need on an annual basis for the next 30 years                   you would need to set aside approximately $14,000 to $17,000 each year.

With both of these “do-it-yourself” scenarios, you need to be a very good investor and have the time to complete your plan.  When you look at these numbers in comparison to the yearly premium for long-term care insurance, you’ll see that buying a policy is a true bargain and just makes good sense.

Also keep in mind that most of us pay income taxes.  Depending on your tax bracket you would need to earn more than these amounts in order to have the net dollars to set aside.

Why Do You Need To Think About This Now?

Retirement and your 80th birthday may seem a long way off.  However, your journey to these events is currently underway.  Just like you can’t start saving for retirement the day before you stop working, planning for long-term care must start today as well.

As with most insurance policies, premiums for long-term care insurance are age-rated.  This means you will start at a higher premium if you are 55 today than if you are 50.  And, the cost of care increases annually as well.  Therefore the price of waiting to purchase a policy can be significant.

While money pays for long-term care insurance, health buys it.

That’s right; your health plays a significant part in the premium you pay for long-term care insurance or whether you will qualify at all.  As we get older, our health can deteriorate. It is much easier to qualify for long-term care insurance when you are still in good health.

If you are a business owner, some or all of your long-term care insurance premiums may be tax deductible.  It may make sense to purchase your policy while you are younger, healthier and perhaps able to write off all or part of the premium through your business.

There are options available to pay off your policy in 10 years or by age 65.  These options are often desirable for those who wish to retire with a paid-up policy.

What Kind of Retirement Lifestyle Do You Want?

If you qualify, long-term care insurance will cost you a fraction of the do-it-yourself method of paying for long-term care.

So why play games with your future lifestyle and the lifestyle of those around you?

By setting aside a few dollars today, you free yourself to save, invest and spend your other assets the way you want.

Today & Tomorrow

Don’t wait to think about this:  get informed about long-term care insurance now, before you are unable to qualify for a policy or it becomes too expensive to afford. 

Long-term care insurance will never cost you less than it does today!
Protect Yourself Today: Have Peace of Mind Today and Tomorrow!

Why Should You Work With One of Our Agents?
We at Barry J. Fisher/Paradigm Insurance Marketing are nationally-known experts in long-term care and long-term care insurance.  We have deep expertise on many aspects of long-term care insurance, and we take special care to train the independent agents who work with us to be proficient at educating their clients about this critical need.

As an independent agency, we represent the top insurance companies in the country, and our agents will shop the market to come up with the right program just for you.   The agents we work with are not our employees, but are independent business owners who live and work all over California and the United States.  If you are not currently working with an agent or financial planner, we will ask one of our professional agent partners to contact you and they will help you determine whether long-term care insurance is right for you.

To get more information and a free long-term care insurance quote, please Click Here and give us some information about yourself so we can assist you.   You are under no obligation to purchase anything, and we will not share your information with outside parties.  Thank you for your interest!

Information Sources:
(1) “Preliminary Data for 2004,” National Center for Health Statistics
(2) Life Tables for the U.S. Social Security Area 1900 – 2100, Actuarial Study No. 116, Social Security Administration
(3) “Financing Long-Term Care for the Elderly – April 2004,” Congressional Budget Office
(4) Metlife Mature Market Survey of Adult Day Services and Home Care Costs, September 2007
(5) Long-Term Growth of Medical Expenditures, U.S. Department of Health & Human Services
(6) “Long-Term Care Claims – April 2005,” Milliman Consultants & Actuaries
(7) “Who Buys Long-Term Care Insurance?” AHIP, April 2007

To get more information and a long-term care insurance quote, please go to the Get A Quote page and give us some information about yourself so we can assist you.   Thanks for your interest!