With more people expected to need long-term care and as the long-term care insurance industry continues to downsize as cost of care mounts, we need to approach the subject of how to pay for long term care differently. Among the issues for retiring Baby Boomers is how they will afford long-term care without depleting all of their retirement funds. Some policy holders of long-term care insurance have been getting notices that their premiums are going up—in some cases 40 to 60%.
The business decision to increase premiums is obvious but so too is the outrage by customer who, having faithful paid the premium for years, now find the increase intolerable. Most long term care policies were written at a time when nursing home costs were about $150 or $200 a day. Today average cost of care is closer to $300 a day, or $9,000 per month. What the middle class doesn't know is that there is no plan for them. They can get their Social Security and use Medicare. They may believe that they're covered for old age, but it won't be enough. A long-term care policy should not be allowed to lapse.
The high cost of long-term care can result in many folks relying on family members. These people struggle to handle their jobs and care for their parents at the same time. And in the event that issues develop that put a person beyond home care (like dementia), the patient will end up facing astronomical healthcare costs. In many cases, the only other option is Medicaid, which covers the cost of care when an individual becomes financially eligible which varies somewhat from state to state with certain federal requirements. An elder law attorney can help you determine whether you are eligible.
Whether you need a long-term care policy and can afford it depends on a family's health history. But like anything else, it's insurance—it's a hedge: you may not ever use it. When you look at the numbers, even with increased policy premiums, you're still going to be better off at the end of the day by having it. People frequently don't take the time to speak with aging parents about making a plan for future care because it is an uncomfortable topic. But the tragedy is when everyone has to scramble in a crisis. Make the time to speak with your aging parents and then meet with an elder law attorney.
Reference: Buffalo Business First (November 23, 2015) "Finding ways to afford long-term care"