This may not be something that immediately comes to mind as we enjoy time with our family, but as the family grows responsibilities also often grow with it. The perspective on how and who will provide care for us as we age depends on what generation you are within your own family. For older generations where healthcare is becoming more of a concern, the question can be more urgent.
- How much does it cost to pay for help?
- What does help look like in 2024; is it a nursing home, assisted living, at home care or something else?
- What qualifies as ‘Long Term Care’ according to healthcare and insurance providers?
- What are the costs for different levels of care, and can we afford to get the care and quality we wish to receive?
These are all relevant and important questions to consider. Having the discussion with family and friends about the prospects of needing help, who will provide it, and the financial impacts, can be eye opening. Today most nursing home costs are actually paid by Medicaid, the federal program designed to provide healthcare for impoverished and aging adults.
If at some point in the future, you or a member of your family need Long Term Care, you may have a family member or friend provide the care. The challenges and considerations are:
- How may this impact their lives?
- If the caregiver works, will he or she be able to continue working?
- Do they have the skill, knowledge and ability to provide the care required?
- Are there other people that are also relying on them such as young children?
This is the tip of the iceberg. There are many factors to consider.
Generally, people may ‘self-insure’ these costs by paying for services themselves with their own assets. The cost of care varies greatly depending on location, services, amenities and experience of the caregivers. According to Genworth, the average costs are:
- In-Home care services ranges from $5,720 per month to $6,292 per month.
- Community and Assisted Living is $2,058 (adult day health care) to $5,350 per month.
- Nursing Home Facility is $8,669 to $9,733 per month.
In addition, all baby boomers will be at lest 65 or older by the year of 2030 and 70% of them are expected to require Long Term Care in their lifetimes.
Alternatively, Long Term Care Insurance is another option. These policies have come a long way from the policies of the 80’s and 90’s. The changes have made new products more appealing and tax efficient. They have flexible premium options and benefits are triggered according to the ability to perform Activities of Daily Living. Qualified Long Term Care policies pay benefits tax free, and they provide significant leverage of your premium dollars compared to self-insuring.
Whether you self-insure or purchase an insurance policy, having a conversation with those you love and those who will be impacted by a Long-Term Care need is a good first step to developing a plan for care.