More and more Americans recognize the need to save for retirement. But few are aware of the need to protect their savings against the steadily growing costs of long-term care services.
Long-term care insurance can cover the costs of long-term care services and protect lifetime savings. It enables you to maintain financial independence and gives you the dignity of choice by covering a wide range of services in a variety of settings. ACLI members paid out nearly $12 billion in total long-term care insurance claims in 2019 alone.
High Risk, High Costs
A lifetime of retirement savings can be wiped out by an unexpected need for nursing home, assisted living, or at-home care. This happens more often than anyone expects--about 70 percent of Americans age 65 and older will need long-term care services at some point in their lives.
Yet, many people are unable to save enough on their own to cover the costs of long-term care. Today, the median cost of a one-year stay in a nursing home is $105,852 for a private room. In 30 years, the same stay is expected to reach $256,932. Home care is less expensive, but still costly: a visit by a home health aide today can cost $4,576 a month.
Sources to Pay for Long-Term Care
Health insurance seldom pays for long-term care services and the government provides only limited coverage through Medicare and Medicaid. Medicare provides skilled nursing-home care only for a short time following hospitalization and limits help at home to those who need skilled nursing care and rehabilitative therapy. Medicaid is for the poor. Middle-income individuals may qualify for benefits, but only after spending down their savings.
Long-term care insurance, however, pays for care needed to cover help with activities of daily living--bathing, eating, dressing, using the toilet, or transferring from bed to chair. It is an affordable way to protect against the risk of having to use your savings to pay for long-term care, and covers services in a variety of settings.
Because consumers have demanded greater choice and help in maintaining their quality of life, insurers now offer policies covering services that promote independent living including adult day care, assisted living, in-home care, care management, support for caregivers (respite care), and home modifications, in addition to institutional care.
Long-term care insurance is sold to individuals or through a group plan offered by an employer. Coverage is purchased for a period of time, such as one or six years, or for lifetime coverage.