Fully Protected: The Importance of Long-term Care Insurance

Fully Protected: The Importance of Long-term Care Insurance

I remember being in my 20s and hearing people talk about the importance of saving for retirement. I recall how far, far away retirement seemed when I was in my 20s—so far away that it felt strange to even talk about such a thing!

Now, like so many of my middle-aged contemporaries, I find myself asking, “Am I putting enough back for retirement?” Thankfully, people tend to mature and see the value of preparing for the future ahead of time. So here we are, cruising along through our 40s and 50s only to find we are once again being directed to cast our vision forward—this time to prepare for the possibility of long-term care in our later years. But that seems forever away. Yeah, maybe, but remember, that’s what we said about retirement when we were in our 20s.

What is Long-term Care?

According to the National Institutes of Health, long-term care (LTC) has to do with a variety of services which help meet an individual’s health or personal care needs, allowing that person to live independently and safely when they cannot perform their everyday activities on their own. It can include providing meals, adult day care, transportation services, professional care from nurses and/or aides, or taking up residence in an assisted living community. The phrase “long-term care” refers to individual care situations that are of a more permanent nature (i.e., care for an Alzheimer’s patient) rather than temporary (such as the time required to recover from a surgical procedure).

Long-term care is by far the biggest health care need of the elderly; it’s today’s most common catastrophic health-care expense. According to Genworth’s 2020 Cost of Care Survey, in-home care can total more than $4,000/month. Nationally, the monthly median cost of an assisted living community comes in around $4,300. In addition, Genworth shows the median monthly cost of living in a nursing home can range between $7,756 for a semi-private room and $8,821 for a private room. The numbers are truly sobering.

What is Long-term Care Insurance?

Ramsey Solutions defines long-term care insurance as “basically nursing home or assisted living insurance.” It is important to note that Medicare (as well as most health insurance plans) will not cover LTC, but a specifically designated LTC insurance policy will cover the cost of LTC services which people may need as they age. Having a long-term care insurance policy is a little like purchasing a parking permit: it gives you access to parking that’s near the event you’re attending, but its convenience is off limits to those who don’t have the permit. Event attendees without the permit can still park their cars, but they have to do so much farther away and they wind up paying dearly in both time and shoe leather.

Why the “Rush” to Purchase Long-term Care Insurance?

So, you might be thinking, “Well, I’m only in my 40s or 50s right now; I’ve got time to look into LTC insurance later.” True, but the real question is how much are you willing (or able) to pay for it? Long-term care insurance premiums will be less expensive if the policy is purchased when you’re in your middle-age years—anywhere between your late forties and your mid-sixties. As your age increases, so do the monthly premiums. According to a breakdown presented by AARP in 2019, the monthly cost of LTC insurance purchased at age 50 will average around $205 (this will vary by location and the type of coverage chosen). By age 65, that same coverage will cost $338 per month. That’s an increase of roughly 65 percent. From that perspective, an earlier purchase may very well be more cost effective.

I’ve encountered many people who would have benefited by having a long-term care policy in place, but they never took the time to look into it properly. Without it, caregiving becomes exponentially more difficult, and the number of options available are limited by what an elderly person (or a member of their family) can afford to pay out of pocket. A quick internet search can help you find insurance companies who sell these types of policies; check with several to see which one has the most cost-effective plan for you. Remember what Benjamin Franklin said: “If you fail to plan, then you’re planning to fail.” Let’s strive to make caregiving a “no failure” zone.


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