Many people are suspicious of statistics; however, more research reveals the financial impact future long-term health care will have on American families.
A new HealthView Services report exposes the statistical risk for couples once they reach the age of 65. An average healthy 65-year-old couple, living to their forecasted actuarial longevity, has a 75% probability that one partner will require a significant level of long-term health care.
Healthview Services is a leading provider of retirement healthcare cost data and other services for the financial services industry.
The HealthView Services report also shows a 25% likelihood that both spouses will need long-term health care, whether it be in a skilled nursing facility, an assisted living facility, or require at least 44 hours per week of in-home care.
The report uses their actuarial data to highlight the future costs of long-term health care services. It calculates the probability, the potential duration, and the impact of age, gender, health, and location on these future expenses.
In-Home Care Becoming More Prevalent
The report, named "Long-Term Care and Financial Planning," also reveals the cost of different types of extended health care and the importance of the amount of assistance that may be required when budgeting for home health care at the end of life.
"COVID-19 has led to a new focus on long-term care and driven a shift toward home health care as a preferred option. Although Americans may be more aware of long-term care as an issue, most choose to roll the dice when it comes to these expenses," said Ron Mastrogiovanni, CEO of HealthView Services.
A healthy 65-year-old woman living to an actuarial life expectancy of 89 has a 56% probability of needing long-term health care. Her average duration of care will be 992 days, and projected costs will be $373,712 ($183,841 present value) or 58% higher than her partner, given the longer period of care and higher annual costs driven by projected increases in the costs of long-term health care.
People Need Long-Term Care Due to Illness, Accident, or Aging
The report shows the impact of chronic health conditions on the future risk of long-term health care for men and women, including:
- type 2 diabetes
- tobacco use
- high cholesterol
- cardiovascular disease
Other than heart disease, the chance of needing long-term care is lower for both men and women with chronic health conditions with reduced longevity.
HealthView Services' planning data shows that when long-term care is required by those with a chronic condition, on average, it happens at an earlier age and for a longer period compared to a healthy individual.
Long-Term Care Costs Increasing Yearly
For an average 50-year-old couple, costs will be significantly higher than for the 65-year-old couple, driven by an extra 15 years of increased costs.
Assuming projected average longevity, an industry standard of 44 hours of home health care per week, one chronic health condition, and residency in San Francisco, California, a 50-year-old man can expect to spend an average of $368,421 ($128,755 present value) and his wife $486,520 ($166,309 current value) for long-term care.
The LTC NEWS Cost of Care Calculator shows the 2021 national average for a private room in a nursing home to be $106,488 a year. In 25 years, the costs would be expected to run $236,541 a year.
Most long-term health care services are delivered outside nursing homes, however. While that is good news, although less expensive, these costs are still financially devastating for most families.
The 44 hours of in-home care is averaging $53,402 a year today, and in 25 years, that is expected to cost $118,621 a year. Adult Day Care Centers are now averaging $19,861 a year, but in 25 years, that cost should run $44,115 a year. Assisted living averages $50,924 a year (base cost - not counting surcharges based on the amount of care you need). In 25 years, the average base cost is expected to be $113,116 a year.
Care Costs Depend on Location and Type
The cost of long-term health care varies depending on where you live. For example, Connecticut is a high-cost state. Today's average nursing home costs run $164,798 a year compared to the national average of $106,488.
Considering the cost in 25 years that should average $388,358 a year, you'll understand the financial impact.
On the lower end of nursing home costs, in Oklahoma, the current average is $63,510 a year, much lower than the national average and substantially less than the cost in Connecticut.
Again, most care is delivered outside of nursing homes. Base assisted living costs in the District of Columbia are on the high end, with today's average being $111,195 a year. However, on the low side is Missouri, with today's average base cost running $34,128 a year.
Long-Term Health Care Affects Families and Finances
These details reflect the financial consequences of future long-term health care on the care recipient but do not consider the economic implications of unpaid family caregivers who are often, by default, the first caregivers.
In addition to the financial considerations, families face tremendous physical and emotional pressure when their parent requires long-term health care.
More and more people worldwide live to older ages, increasing the number of people who require long-term health care services before they die. Unfortunately, the increased longevity has also increased the number of people with Alzheimer's and other dementias.
Preparing for the future costs and burdens of aging is vital for retirement planning due to the probabilities. Most people start noticing changes in their health and bodies once they get into their 40s. As we get older, we often start seeing declines in our cognitive ability as well.
LTC Insurance Safeguards Savings and Eases Family Burden
For many people, affordable Long-Term Care Insurance is the ideal solution giving people access to their choice of quality care services, including in-home care.
Several plans are available, including single premium hybrid policies with death benefits, traditional partnership plans with dollar-for-dollar asset protection, and even limited short-term plans.
Most experts suggest obtaining coverage when you are younger and healthier, ideally in your 40s or 50s when you still have reasonably good health. Premiums can vary over 100% between insurance companies for the same amount of coverage.
Consumers should seek the advice of a licensed and experienced Long-Term Care Insurance specialist to help them navigate the many options to match their age, health, and family history with the right company and coverage.