The Wise and the Wary
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Long-term Care Insurance: What Are Your Odds of Needing It?
And remember that unpaid care always involves other costs
The following statistics are from materials prepared by the federal Department of Health and Human Services and the Centers for Medicare and Medicaid Services.
For folks turning 65 in 2005, 79% of women will need long-term care, while 58% of men will need it. (Women’s longevity has a downside!) Here is what the records show for both sexes:
- No usage of long-term care: 31%
- One year or less of usage: 17%
- One to 2 years of usage: 12%
- Two to 5 years of usage: 20%
- More than 5 years of usage: 20%
These figures reflect both paid and unpaid care. Remember, though, that unpaid care always involves other, often hidden costs, such as lost earnings, travel, stress, and burnout for the friends and family providing the caregiving.
What are the typical costs for paid long-term care? Again, for people turning 65 in 2005, here’s the breakdown of what they can expect to pay over their lifetime:
- Zero: 42%
- Less than $10,000: 19%
- Between $10,000 and $25,000: 8%
- Between $25,000 and $100,000: 14%
- Between $100,000 and $250,000: 11%
- More than $250,000: 5%
The average lifetime expenditure for paid care, whether delivered at home or at a facility, is $150,000.
Before making any decisions about purchasing long-term care insurance, you should first find out about your state’s requirements for Medicaid eligibility. All states have need, income, and asset tests for eligibility, but you may be surprised about what you can keep while still qualifying for state aid for long-term care. In Colorado, for example, married couples can generally retain most personal property, up to $500,000 equity in a personal residence, and an additional $109,000 in other assets, while qualifying for nursing home payments by the state. Consult an elder law attorney specializing in Medicaid planning before ruling out this source of funds.
By Deborah Hoskins, JD, CFP
The Wise and the Wary Blog
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