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Retirees: How Will I Pay for Long Term Care Coverage Now?

Long term care Coverage is one of the biggest issues in America today. Because of various factors and unique circumstances, many Americans find themselves ill-equipped to face the costs imposed on care. And despite the prevalence of long term care educational resources and reminders, many individuals still find themselves unable to plan accordingly.

What is terrifying about this is the impending Silver Tsunami looming over us. The Baby Boom Generation is rapidly transitioning into Retirement, and so many of them are unprepared for what that means. On top of that, older generations are living past their 80s with depleted financial resources to cover the costs.

In today’s America, the golden years may not be as golden as people initially thought.

Retirement Issues You Cannot Overlook

It is a crisis waiting to happen. According to a study conducted by the Insured Retirement Institute, 76 million Baby Boomers are currently living in the United States, and 40 million of these individuals are age 65 and older. Moreover, 10,000 people belonging to this age group are retiring daily until 2030.

However, those numbers are not the ones that make retirement dismal for most Baby Boomers. For approximately 35 million of them, the anxiety-inducing fact is that they have zero retirement savings this close to the finish line.

Such is the reality of most Baby Boomers. Many of them have spent their lives balancing a career, caring for their families, putting their children to school, and providing support of all kinds to aging loved ones. Once the dust clears, they are often left with limited resources to provide the care that they need in turn.

People were significantly relying on Social Security benefits to sustain their lifestyles after retirement. And the sad truth now is that solely depending on those benefits is a dangerous move because studies show that senior households spend more money during retirement. Research has found that households spend 120% more than they did before leaving the workforce. And what is more surprising is that 23% of these households are now on their sixth-year mark post retirement.

Needless to say, this is not the only issue retirees have to deal with during the supposed golden years. Baby boomers struggle to save for retirement and consequently secure comprehensive long term care coverage.

The Importance of Proper Long Term Planning

We have all heard it worded in various ways. But it is still worth mentioning that according to the US Department of Health and Human Services, 70% of the people turning 65 can expect to need long term care services in the following years. And the care period lasts for 2.2 years on average for men and 3.7 women.

Long term care planning is one of building blocks of a successful retirement. Without it, everything you have worked hard for can easily crumble. After all, we are one diagnosis away from the crippling effects of long term care.

The Real Cost of Long Term Care

To better understand the need for long term care planning, here is a table that breaks down the average cost of care services for 2016:

Long Term Care Service

Annual Cost

5-Yr Annual Growth

Private Room at a Nursing Home



Semi-Private Room at a Nursing Home



Assisted Living Facility



Adult Day Care



Homemaker Services



Home Health Aide



Keep in mind that these numbers are just the median costs. In some states, annual care costs can jump to six figures. In Alaska, a year’s worth of care at a nursing home can put a person behind by $297,840!

Understanding the Consequences

Contrary to what many people think, it is not just a concern for the elderly. The lack of a secure and comprehensive long term care plan affects the younger generations in many ways.

First of all, younger individuals also need long term care services. In fact, studies show that 3.7 million people age 64 and younger are long term care recipients.

Moreover, the need for long term care has been changing the dynamics of the family. Roles are now being reversed as more individuals are pushed by their circumstances to depend on their children for support and care. In 2015, 43.5 million family caregivers were recorded in the United States. But some individuals do not see themselves as caregivers, so it is highly possible that they were not included in that count.

When this happens, their children end up in a compromising position. They are unable to save for their own retirement, and some have even had to leave their jobs to meet the demands of caring for an aging parent.

Different Ways of Securing Long Term Care Coverage

It is so easy to put planning on the back burner in favor of as your aging parent’s expenses or your children’s tuition. In fact, a survey conducted by the AP-NORC Center showed that one-third of adults age 40 and older have not planned at all for their own long term care needs.

However, people need to be reminded that time is ticking. You have spent all your life saving money, and some of that needs to go to plans that safeguard your future. As minor as it may seem now compared to your other concerns, long term care coverage is necessary. And you need to start planning for it now.

Government Health Insurance Programs

Medicare and Medicare are government-funded programs that may provide long term care coverage. Many often assume that these two programs are enough to get through care needs, and there are statistics to back that prove this. According to the AP-NORC Center study, nearly four out of 10 of their respondents mistakenly expect Medicare to pay for their long term care needs.

However, according to their website, Medicare does not cover long term care/custodial care if that is the only service that you need. Instead, it covers hospice and respite care, eligible home health services, skilled nursing care in a skilled nursing facility, and care in a long term care hospital.

Moreover, Medicaid typically does cover long term care services such as personal care, home health care, adult day care, and nursing home care. But in order to get coverage, you must meet certain financial and health qualifications. People have had to spend down their resources and assets in order to meet the limit set to qualify for Medicaid benefits.

Out of Pocket

Through thorough planning, paying for long term care services out of your own personal funds is possible. However, bear in mind that self-funding services that cost as high (and unstable) as long term care is a big risk.

Financial experts often discourage retirees from going down this path, especially if their resources and nest egg are not are limited. It goes without saying that self-funding is only reasonable if you have substantial assets that provide hefty and steady cash flow. If not, then this could drive a devastating blow to your estate. To pull this off successfully, you might want to consider working closely with a financial advisor.

Long Term Care Insurance

Long term care insurance has received mixed views. Many have been lukewarm towards it. They claim that this type of insurance is not worth the time and effort.

However, a recent survey by LifePlans Inc. on behalf of AHIP discovered that those who pushed through with their plans despite the backlash are in fact satisfied policies. The study highlights that 90% of the current policyholders are happy with the amount of long term care coverage that they have. On top of that, eight of out ten respondents stated that filling a claim was easy. And lastly, 89% shared that their plans were enough to cover all their needs that they did not have to purchase any additional services.

Truthfully, securing long term care coverage can be overwhelming for many, which could then lead to committing errors. To assist you in purchasing, refer to our post, A Detailed Guide to Buying Long Term Care Insurance. The article discusses extensively the initial steps to take, the different methods of purchasing a plan, the services for which you are paying. If you have any more questions, then feel free to get in touch with us. We would be happy to accommodate any of your concerns.

Final Thoughts

It is true that long term care is a massive problem in the United States. However, having a stable and stress-free retirement is still doable no matter how impossible it seems at this point. You just need to be proactive about it. You need to start planning now, and you need to do it wisely and effectively.

Do your research, and learn from the past mistakes of those before you. Find the long term care coverage that matches your unique needs and circumstances. Also, take the time to understand what you are up against. Monitor the trends in the long term care industry, and initiate a friendly discussion with your peers about it. This way, you can all learn from each other and find other effective ways to reach your common goal.

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Retirees: How Will I Pay for Long Term Care Coverage Now?


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