Long-term care planning is something most Americans fail to do for themselves or for their loved ones. This can put adult children in a position of feeling helpless and lost when the time comes to make arrangements for their parents' care.
WIVB's recent article, "The cost of caring for aging parents: How to plan for long-term care," also notes that saving for retirement isn't a big priority for many Americans, let alone saving for long-term care.
Statistics show that almost 50% of all Americans don't have a retirement savings account. Of those who do, the average amount in the account of a person between 50-55 years old is only $124,831. That hardly covers many years in a nursing home.
Statistics show that 70% of people over 65 will need some type of long-term care. However, it's difficult to do something about it because most people don't want to think about their health deteriorating.
Options for elderly people who need constant medical care include nursing homes and assisted living facilities. These can cost several thousand dollars a month. Another option is a home health aide, which costs about $20/hour. That can add up quickly if your loved one needs eight to twelve hours of care every day and there's no insurance to cover it.
In most instances, Medicare will not cover long-term health care costs. While it might cover up to five or six weeks of home health care after a surgery or hospitalization, further costs would have to go under Medicaid. That program has very low income/asset threshold qualifications.
The other option is purchasing long-term care insurance. Because of the fact that this is a type of care 70% of people will use, the premiums are high. Life insurance is another way you can help cover the cost.
Some insurance companies have a rider to their life insurance contracts for long-term care that allows individuals to use some of the death benefit to help pay for long-term care expenses. There still will be a benefit inside the life insurance contract that could be paid to a beneficiary. But "self-insuring" isn't the best way to go since it's risky, and it can end up costing more in the long run.
Always a great option: talking to an elder law attorney to learn about protecting your loved ones and assets from the costs associated with long-term care.
Reference: WIVB (May 4, 2016) "The cost of caring for aging parents: How to plan for long-term care"