Data to Help You Decide About Long-Term Care Insurance

Published on Sun, 03/18/2018 - 22:11
Data to Help You Decide

As your friends and colleagues experience the challenges of caring for aging parents and loved ones, you may wonder about your own situation. Are you prepared to cover the cost of long-term care for yourself or a significant other? Is long-term care insurance a good idea?

What is long-term care?

A good place to begin planning for long-term care is to understand how long-term care is defined and how it differs from health care. Think of long-term care as custodial care, assistance with the activities of daily living or ADL (eating, bathing, transferring (moving from chair to chair), toileting, dressing, caring for incontinence). For most insurance companies and government agencies, the threshold for receiving long-term care services is the inability to perform two of the six ADLs. These services are not medical in nature and therefore, they not covered by health insurance. This is an important distinction because many mistakenly believe that long-term care will be covered by Medicare. It won’t.

What does long-term care cost?

Now let’s move on to the cost of care. Genworth, a long-term care insurance carrier, makes it easy to learn about the current and future costs of long-term care in your area. Each year Genworth shares cost-of-care information nationally and state-by-state for each of the ways care may be provided. Usually, long-term care begins with care provided in the home then escalates to assisted living, often ending with some length of nursing home care. More than 69 percent of people need at least one of these services at some point.

The chart below shows the estimated costs in 2017 and the same projected costs in 2032 for each phase of care. It’s important to know the projected costs because if you may need services in 15 years, you need to know if your savings at that time will be sufficient. For those without sufficient savings or long-term care insurance, the cost of care burden is often shifted to adult children.

Service provided Monthly cost


# of

months used

  2017 2032   2017 2032
Home care Home maker $3,994 $6,223 $47,928 $74,676
Home health care $4,099 $6,386 12 $49,188 $76,632
Assisted living facility $3,700 $5,842 12 $44,400 $70,104
Nursing home facility (private room) $8,121 $12,652 24 $194,904 $303,648
Total cost of care       $336,420 $525,060


Which Can I Afford: Annual Premium or Cost of Care?

While this information is based on averages, it does convey the enormous impact long-term care can have on fixed financial assets. The question: Can you afford to pay for 100 percent of the care needed or would it make more sense to pay for long-term care insurance?

For a reasonable annual premium, long-term care insurance shifts a large part of the financial burden to the insurance carrier. The annual premium for a long-term care policy providing a daily benefit of $200 for 4 years may cost a couple in their 50s today about $4,200.

Long-term care insurance premium varies by state and, of course, the benefits selected. Compare the annual premium outlay for 20 years with the total cost of care. Using the estimates in this article, 20 years of annual premium at $4,200 would provide $292,000 in benefits over four years for each insured. It’s worth repeating, that 69 percent of people 65 and older will need some form for long-term care at some point.

According to a recent study, beneficiaries of long-term care insurance receive, on average, $2.78 in benefits for $1.00 paid in premium.

As you consider long-term care insurance, contact Heffernan Insurance Brokers. We will guide you through the decision-making process and answer any questions you may have about long-term care insurance and the benefits you can rely on. When it comes to finances, there is no one-size-fits-all solution. Our goal is to work with you to develop a plan that works for you.