Long term care plans are purchased to protect a person's assets from being spent down in the event that he/she could no longer take care of himself/herself and would need assistance. These plans cover a variety of services from nursing home benefits to home health care, hospice and other services that allow the claimant to maintain the most freedom and autonomy as possible.
Traditional health insurance and disability insurance are not designed to pay for long term care services. Additionally, Social Security and Medicare do not pay for the costs of long-term care. Private long-term care insurance may be your best option to help cover the future cost of care. Below are some startling statistics about long term care in America.
- 40% of people receiving long-term care are working-age adults between the ages of 18 to 64. (National Clearing House for LTCI Information, 2008.)
- 74% of consumers ages 55 to 65 polled for a recent survey said they are concerned about needing some kind of long-term care. (Prudential Financial Inc. Network, N.J. 2010 Long Term Care Cost Study.)
- About 70% of Americans over the age of 65 years will need long-term care services during their lifetime. By 2020, this number is expected to exceed 12 million. (Prudential Research Report: Long Term Care Cost Study, 2010.)
- About 74% of consumers between the ages 55 to 65 are already looking into some type of long term care. (Prudential Research Report: Long Term Care Cost Study, 2010.)
- Aging Baby Boomers will significantly impact the potential demand for long-term care services over the next two decades -- according to research by Prudential Financial, over the next 20 years the number of Americans age 65 and older will more than double to 71 million, comprising roughly 20% of the US population.
- Nationally, home health care costs have grown by 13% since 2008 and the annual cost for a private room in a nursing home exceeds $90,000 in 2010. (Prudential Research Report: Long Term Care Cost Study, 2010.)
- About 70% of people over age 64 will require some type of long-term care services during their lifetime. More than 40% will need care in a nursing home. (National Clearinghouse for Long Term Care Information, 2008.)
- Women will need care longer (3.7 years on average) than men (2.2 years on average), mainly because women typically live longer. (National Clearinghouse for Long Term Care Information, 2008.)
- While about 1/3 of people 65 years old may not ever need long-term care services, 20% will need long term care for longer than 5 years. (National Clearinghouse for Long Term Care Information, 2008.)
March 30, 2011
People need insurance, but do retirement funds? "Absolutely," says Jonas Roeser, Senior Vice President of Marketing & Operations for LTC Financial Partners LLC (LTCFP). "If you're not thinking about your own health as you age, think about the health of your 401(k) or IRA. If your retirement vehicle becomes disabled or loses life blood, how can it support you when you need it?"
The average 401(k) has gotten healthier in recent years. The average balance rose to a 10-year high of $71,500 last year, up 11.5% from 2009, according to a February report from Fidelity Investments. Good news! But the healthiest fund can lose capacity fast when a family lacks long-term care insurance (LTCi).
Any family member -- your spouse, parent, or child, if not you -- may have a sudden need for long-term care, "and your retirement fund may fall victim," Roeser says. "If you don't have LTCi, you're in effect self-insuring, and your retirement money will most likely take the hit."
The math is sobering. According to a recent study by MetLife, the annual cost of a private room in a nursing home rose to more than $83,500 in 2010, up 4.6% from 2009 -- enough to wipe out the average 401(k). If you or a family member could get by with in-home care, the financial damage would be less.
According to MetLife, the cost of in-home health care by a trained assistant was $21 per hour in 2010. If this care were needed an average of six hours a day, the cost would be about $46,000 for a year, leaving $25,500 in the average 401(k). Early-withdrawal penalties, however, would decrease the balance. "Also, care might be needed for two, three or more years," Roeser adds. "And more than one family member might require care."
"The numbers explain why many financial advisors, not just medical professionals, are advising their clients to consider long-term care insurance," says Roeser. "Financial health, not just physical well-being, is at stake. If you won't buy a long-term care policy for yourself, buy one for your IRA or 401(k)."
LTCFP is one of America's largest and most experienced long-term care insurance agencies. The company is a co-founder and sponsor of the "3 in 4 Need More" campaign, which seeks to multiply the number of Americans protected by long-term care planning.
High Deductible Health Plans are a great way to save money on both your premium and taxes, but have you ever wondered what you can spend your money in your Health Savings Account on -- what are eligible or ineligible expenses? Our friends over at SelectAccount have provided us with the following listing of Qualified HSA Expenses that you will find very helpful!