In 2034, the United States will reach a milestone. The Census Bureau projects that for the first time ever, the number of people age 65 and older will exceed the number of children under the age of 18. It’s a phenomenon referred to as the graying of America. With the number of older adults increasing, so too is the need for senior living communities.
As new retirees and soon-to-be retirees plan for the future, one concern that often arises is the cost of care and how to pay for it. That’s an important consideration, as research shows as much as 70% of people need long-term care at some point. In some cases, it’s temporary care following an illness or surgery. For others, the need for care is permanent. In both situations, long-term care insurance may be helpful.
What Is Long-Term Care Insurance (LTCI)?
Unlike Medicare and health care insurance, which focus on medical needs, long-term care insurance covers expenses for what is known as custodial care. It’s a term that encompasses the activities of daily living (ADLs) — tasks such as bathing, grooming, dressing, using the bathroom, and moving in and out of a chair or bed.
LTCI also covers the cost of care for seniors who might not be safe living alone. Adults with dementia, for example, often develop memory impairment or a loss of judgment as the condition progresses. Living alone without assistance can put their physical well-being in jeopardy.
While people often understand long-term care insurance will cover the costs of nursing homes, most policies pay for more than that. LTCI plans may also cover care in additional settings, such as:
- In-home care at the senior’s private residence
- Adult day centers
- Independent living communities
- Assisted living communities
- Dementia care communities or programs
If the policy holder meets the criteria established by the LTCI company — usually when the senior needs help with two out of five ADLs — the policy will pay a daily rate. Most have an elimination period, often 90 days, that must be met first. This is comparable to a health care insurance deductible.
With women needing long-term care assistance for an average of 3.7 years, and men for 2.2 years, it’s a good idea to discuss the topic with your financial planner. They can help you balance the cost of long-term care insurance with the benefits these policies provide.
How Much Does Long-Term Care Insurance Cost?
Long-term care insurance costs vary according to each person’s unique situation. Women tend to pay more because they usually outlive men. And couples often receive a discount. If you’re looking for a ballpark number, the American Association for Long-Term Care Insurance compiled this information in easy to review reports based on a potential buyer’s age, sex, and marital status.
Are There Tax Advantages to Purchasing LTCI?
If you itemize your taxes, there may be some federal and state tax advantages to buying long-term care insurance. To learn more, review Long-Term Care Insurance Tax-Deductibility Rules – LTC Tax Rules.
The bottom line, however, is that the decision to purchase long-term care insurance can be complicated. It’s a decision probably best made with input from an elder law attorney or a trusted financial planner.
Eagle Senior Living Focuses on the Individual
At Eagle Senior Living, we treat each resident with kindness and consideration. It’s an individualized approach that allows older adults to live their best quality of life. Whether you’re searching for inspired Independent Living, uplifting Assisted Living, or compassionate Alzheimer’s and Dementia-focused Memory Care, we can help.