Will You Need Long Term Care? How Much Will It Cost You?Will You Need Long Term Care? How Much Will It Cost You?

70% Americans are going to need long term care at some point in their lives. This means that, if it’s not you, it will be your partner, your kid(s), or another relative/close friend 🤔

Since you are practically guaranteed to be dealing with long-term care costs at some point- whether on your behalf or that of a loved one- let’s help you understand and create a plan around this eventuality 😊👍

The Department of Health and Human Services (HHS) created a model around long-term care after age 65: how many Americans will need it, for how long, who pays for what... and who doesn't pay... 🤨

These are not scary thoughts, by any means; once you know what to expect, you can create a plan to deal with any long-term care needs you may have. So let’s dive deeper into “what is the most likely scenario” regarding long-term care*:

• 70% of Americans will need LTC at some point in their lives 👨👩👴👵

• 75% of Americans will need LTC for less than two years 📅

• The average person will spend $266,000 on LTC. Of this $266,000:

  • $7,000 will be covered by private health insurance (3%)
    Health insurance does not generally cover LTC. LTC insurance is prohibitively expensive, currently, and few companies offer standalone LTC insurance.

  • $26,000 will be covered by Medicare (10%)
    Qualification for Medicare depends on age and disability status. If a person does not qualify for Medicare, then that person can choose to either pay for those services by increasing their out-of-pocket spending, or they can do without those Medicare-covered services.

  • $91,000 will be covered by Medicaid (34%)

    Qualification for Medicaid depends on income. If a person does not qualify for Medicaid, then that person can choose to either pay for those services by increasing their out-of-pocket spending, or they can do without those Medicaid-covered services.

  • $140,000 will be out-of-pocket spending… by you. That’s 53% of your LTC needs 😦

For those hefty out-of-pocket costs, I hope you have a Living Benefits policy! 👍

If you do not, then you need to set aside $38,000 to over $70,000 today (depending on how much time you have to invest and grow that money, to be enough for your likely needs).

And remember, you do need to set aside that money- it can’t just be a part of your retirement savings! If you say “Oh, I’m on track for a great retirement”… and then you spend $266,000 on your LTC… then your retirement will be a lot less great 😬

Knowing how much to set aside for your future needs is a crucial part of a robust financial plan. Be brave and ask your money person directly: “Let’s say I get seriously ill or injured and can’t work, or need $250,000 of care. Where will that money come from?” 🤔

If you do not like the answer you get- or, worse, you get no answer or a blank look!- then look into a Living Benefits policy, or adjust your financial plan in other ways. You always have options when it comes to your future 😁👍

Now That’s Smart Money 🧐

*Note that, for the statistics in this article, LTC refers to paid long term care; these numbers do not include the costs of having family/friends help with your care. The costs of unpaid care are lower- $138,000 instead of $266,000- but such care is required for much longer- an average of four years, instead of two years.

An HHS article about the costs of LTC can be found here. Another HHS article about the lifetime risk of needing LTC is here. These are only recommended reading if you like government-published articles, or if you have insomnia and you need some reading material to help you sleep 😆