Many Americans fail to plan for long-term care due to a combination of denial, misinformation, and procrastination. Many underestimate their risk of needing such care, often influenced by misconceptions about the likelihood of requiring it and the effectiveness of available coverage options. Additionally, the complexity and perceived high cost of long-term care can deter individuals from proactive planning, leaving them unprepared for future needs.

Who Will Need Long-Term Care

Approximately 14 million people in the United States currently require long-term support services. The Department of Health and Human Services (HHS) estimates that 70% of seniors reaching the age of 65 will need some form of long term care before the end of their lives. By 2030, it is projected that 24 million Americans will need long term care.

Quality of Long-Term Care

The quality of long-term care can vary significantly depending on the type of care and the provider. Person-centered care, which focuses on the individual needs and preferences of the patient, has been shown to improve the quality of life for those receiving care. However, not all facilities and care providers adhere to this approach. It is essential for families to research and choose care providers who prioritize person-centered care to ensure their loved ones receive the best possible support.

Cost of Long-Term Care

The 2023 Genworth Cost of Care Survey reveals that the costs of long-term care services have increased since 2022, influenced by inflation and a shortage of skilled care workers. Here are some key findings from the survey:

• Assisted Living Facilities: The national median cost increased by 1.4% to $64,200 per year.
• Home Health Aides: Costs rose by 10% to an annual median of $75,500, reflecting increased demand for personal assistance with daily activities.
• Homemaker Services: The cost increased by 7.1% to $68,600 annually, driven by the need for support with household tasks.
• Nursing Homes: The median annual cost for a semi-private room in a skilled nursing facility rose by 4.4% to $104,000, while a private room saw a 4.9% increase to $116,800.

Medicaid, the largest payer of long-term care services, plays a significant role in covering these costs. As a needs-based benefit, Medicaid covers various types of care depending on state regulations. In 2020, Medicaid covered 42% of the national long-term care bill, totaling $449.2 billion. This substantial coverage underscores the importance of understanding Medicaid’s role in long-term care planning and the need for strategic planning to ensure eligibility while protecting assets.

These cost increases highlight the financial challenges that families face when planning for long-term care. Inflation and worker shortages are the primary drivers, making effective planning and resource allocation more crucial than ever.

Planning for Long-Term Care

Given the rising costs and the likelihood that many Americans will require long-term care at some point, proactive planning is crucial. Effective long-term care planning involves understanding the available options, estimating potential costs, and securing the necessary resources to cover these expenses.

Options for planning include:

• Long-Term Care Insurance: This can help cover the costs of various care services, providing financial relief and protecting assets.
• Asset Protection Trusts: These can shield assets from being depleted by long-term care expenses, ensuring that resources are preserved for beneficiaries.
• Medicaid Planning: For those who may eventually rely on Medicaid, strategic planning can help qualify for benefits while protecting assets.

Conclusion

Long-term care is an important issue for Americans over 40. We specialize in helping people plan for their long-term care needs.  For some people an insurance policy is preferred, for others an asset protection trust may be the way to go.  If you or someone you know needs assistance, please contact us. We are here to help and always happy to hear from you.