Do Your Parents Need Long-Term Care Insurance?

We live in an age of medical miracles. People live longer than ever before and life expectancies are increasing at a steady rate.

Think about this. In 1970, the average life expectancy in the US was just about 70. In 2020, the average life expectancy sits right around 79.

With medical advances and technology moving forward at a rapid rate, it’s estimated that people could easily live much longer than that, too. Nowadays, a healthy person who doesn’t smoke has an over 60 percent chance of living to 90.

This means that many of us will be fortunate enough to still have our parents with us as we ourselves reach retirement age. As families get older, the risk for disease and age-related health issues drastically increases. Thus, the chance that your parents will need nursing or other long-term care is much greater than in the past.

As our parents age, and grow older than people have in the past, the chance that their health will decline is high. My father battled multiple sclerosis for 15+ years. It took three years to figure out what was wrong before we experienced three years with a cane, three years with a walker, three years in a wheelchair, and 3 years in a hospital bed.

We were able to keep him home. But at the end, we were paying $3,000 per month for a home health aid to help with his long-term care needs. At the same time, I had 2 kids under 5 and another on the way. Last thing my father wanted was to be a burden to me, my brother, or my mother. Having access to home health aides helped us enjoy our time together, rather than entirely focused on taking care of him.

Long term care was crucial for me and my family. However, the costs do add up, and they’re adding up to greater amounts than ever before.

So that begs the question: do your parents need long-term care insurance to help offset the costs of home care, nursing home care, or other assisted-living arrangements? Let’s take a look.

The Odds of Needing Long-Term Care Aren’t a Long Shot At All

Maybe you think that you’ll be the lucky one, that your parents won’t need long-term care. But the statistics indicate that we’re living longer, which means that the need for long-term care is much more likely.

Also, parents living alone (especially women, who have a longer life expectancy than men), are more likely to need long-term care without a spouse or partner available to help them out.

Not to mention that as you reach retirement age yourself, you will have your own medical issues, bills, loans, mortgages, and other major expenses that pile up thanks to living longer. Long-term care insurance can help offset the costs of your parents’ care so you can focus on your own expenses.

The Cost of Long-Term Care (Hint: It’s Not Low)

Long-term care can be quite expensive, especially considering that “long-term” nowadays means much longer than it did 20 or even 10 years ago. Long-term care can now extend for years or decades while in the past it might’ve been a couple of months or years maximum.

What’s more, Medicare, Medigap, managed-care programs like health maintenance organizations, and indemnity medical insurance plans don’t pay for long-term nursing home care or for assisted living. Although Medicaid, a state-administered federal welfare program, will cover the costs of long-term care, your parents must be legitimately impoverished to be eligible for it.

If they’re not prepared, your parents might find their lifetime savings and their assets quickly depleted by the cost of paying for long-term health care out of pocket.

As their child, you’ll want to help them protect those assets (and your own inheritance) from being eroded by long-term care costs. One solution to this dilemma might be long-term care insurance (LTCI).

Help Is on the Way Via Long-Term Care Insurance

Generally, LTCI helps pay for the care of an individual who can no longer independently perform the basic activities of daily living, such as bathing, dressing, eating, and toileting, due to a cognitive disorder, illness, or injury.

A comprehensive policy will cover skilled, intermediate, and custodial care in a variety of settings, including nursing homes, assisted-living facilities, adult day-care centers, or the insured’s own home.

The cost of LTCI policies can vary widely and depend on many factors. One of the most major factors is the type and completeness of coverage selected by your parent(s) along with the general health of your parents. Their age will also be a factor in the cost.

The younger and healthier they are, the less expensive the insurance will be — but, younger and healthier means that they’ll be paying for the insurance for longer, which can add up.

Who Most Likely Needs to Consider LTCI?

Deciding whether to purchase LTCI will take some careful consideration along with weighing budgets, pros, and cons.

LTCI might be right for a parent if at least some of the following criteria apply:

He or she is between the ages of 40 and 84
There’s a family history of Alzheimer’s disease
He or she has significant assets to preserve as an inheritance or to gift to charity
He or she has an income from employment or investments in addition to Social Security
The cost of the premiums will not exceed 5 to 7 percent of your parent’s annual income (or yours, if you’re paying the premiums)
He or she is healthy enough to be insurable

Sometimes, the decision to get long-term care insurance comes down to you and your family’s wants and needs. Many people want long-term care in order to protect their loved ones.

For those needing long-term care, it can help them feel more in control and less ashamed of needing help. For family members, employing long-term care for parents or other aging loved ones can help preserve the relationship you have with them; allow professionals to take care of any health-related needs so you and your family can focus on spending time with your loved ones.

More Help Is a Phone Call Away

Long-term care insurance is just one of many aids that you can use to help with rising medical costs and bills that come with age… both your own age as well as your parents’.

Taking care of your own finances is hard enough. Taking into account your parents’ expenses and healthcare costs as well can be stressful and overwhelming. Let me help you there.

We’ll work closely with you to understand your unique situation and craft a budget & plan that works for you and your goals. Whether you need some situational advice or you want to gain a partner in your financial journey, we’ll be your resource.