Make sure you plan ahead - inflation is causing long-term care prices to rise
Stan Horwitz and his family did not plan for long-term care until there was a crisis. His father, Martin, was in his late 80s and lived alone. He refused to allow any assistance from his children.
One day, Stan and his sister found their dad unconscious in his living room after a fall. This incident happened six years ago, and caused several medical issues, to the point where Martin was never able to return home. When it came to trying to sort out his father’s finances, “the bureaucracy was intense,” Stan said. He had also stated that his father was diligent about putting money away, but the high cost of nursing care wiped out his life savings — $300,000 — in four years. Martin, who is now 93, qualifies for Medicaid, which pays for his skilled nursing care.
Unfortunately, the Horwitz family’s situation in paying for long-term care services is fairly common. To make it worse, high inflation will likely make the rising costs more difficult for many families to afford long-term care.
How much can long-term care cost?
The average 65-year-old has a 70% chance of needing long-term care, according to the U.S. Department of Health and Human Services. Yet, 1 in 10 of middle-income adults ages 44 to 64 do not have long-term care insurance, according to a survey by Arctos Foundation and HCG Secure. Many people are not aware that Medicare does not cover costs associated with long-term care services, which can include dressing and bathing.
The costs can vary widely by type of care and location. On average, long-term care costs $50,000 a year at home and $100,000 in a nursing home, according to LTCG, which provides services to the long-term care and life insurance industry. But in Connecticut, LTCG found nursing home care costs an average of $165,000 a year and, in Texas, just over $70,000.
Traditional long-term care policies costs are high
Few long-term care insurance policies have unlimited coverage. Prices vary widely and depend on age, gender, health, and other risk factors. For a new policy with a $165,000 benefit, a healthy 55-year-old could pay $45,000 in premiums by the time they turn 85, according to the American Association for Long-Term Care Insurance.
Tom Beauregard was an executive in the health insurance industry when his parents were in their early 80s and dementia and pulmonary disease required them to have daily care.
“It was chaos, trying to figure this out as a family,” said Beauregard, the founder, and CEO of HCG Secure. “The real chaos came into the decision-making process and the lack of information from my parents.”
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