“Fail to plan and plan to fail,” the saying goes. One thing many people who enjoy good health overlook is the distinct possibility that they will need long term health care at some point in their lives. But the odds are that half of us, as seniors, will need it.
What is long term care?
Most long term care (LTC) concerns helping people perform basic personal activities to meet their bodily needs every day. Although certified and marketed as a type of health insurance, many long term care policies often do not cover medical care.
The health insurance industry considers six ADLs (activities of daily life) when evaluating the need for long term care and insurance coverage eligibility. These are activities that healthy individuals can do without assistance.
The six most common ADLs considered regarding the need for long term care are:
- Functional mobility, often referred to as “transferring”, as measured by the ability to walk, get in and out of bed, and get into and out of a chair; the broader definition (moving from one place to another while performing activities) is useful for people with different physical abilities who are still able to get around independently.
- Toilet hygiene (getting to the toilet, cleaning oneself, and getting back up) and continence (able to control one’s bladder and bowel functions)
- Bathing, showering, personal hygiene and grooming (including brushing/combing/styling hair)
- Self-feeding (not including cooking or chewing and swallowing)
- Mental competency (no dementia, capable of making rational decisions)
One easy way to remember these in their order from waking up: get out of bed, go to the toilet, bathe and groom, dress, and eat. Another ADL is being of sound mind.
Another somewhat somber mnemonic device to learn the first five ADLs listed above is DEATH:
In 2013, researcher John M. Morris stated that ADLs typically decline in a certain order: “the early loss function is hygiene, the mid-loss functions are toilet use and locomotion, and the late loss function is eating. When there is only one remaining area in which the person is independent, there is a 62.9% chance that it is eating and only a 3.5% chance that it is hygiene.”
Medicaid nursing home benefits may require that the state perform an assessment to verify that an applicant needs help carrying out certain ADLs. Some state assistance programs also may require that an applicant is incapable of performing a certain number of ADLs to qualify for coverage. LTC insurance generally uses the inability to perform two or more ADLs as a trigger to begin paying benefits on the policy.
If you think only seniors need long term care, think again. An accidental injury such as a broken hip may require months of recovery time in bed. A significant number of LTC patients check in to a facility and check out within the year. Others, however, check in and never check out.
The American Association for Long-Term Care Insurance says that a “record $10.3 Billion in claims was paid” in 2018 on more than 303,000 policies by long term care insurance companies in the U.S.
The reason so much information about LTC comes from insurance companies is that the out-of-pocket (OOP) expense can be a shocker. You can see average costs for LTC for each U.S. state here.
As of 2016, below are some of the average costs for LTC in the U.S.:
- $225 a day or $6,844 per month for a semi-private room in a nursing home
- $253 a day or $7,698 per month for a private room in a nursing home
- $119 a day or $3,628 per month for care in an assisted living facility (for a one-bedroom unit)
- $20.50 an hour for a health aide
- $20 an hour for homemaker services
- $68 per day for services in an adult day health care center
The typical horror story told by health insurance agents is that of people’s retirement nest eggs being eaten up by unexpected LTC costs.
A plumber on a house call in the Denver, Colorado area told me the sad tale of his father (in his late 60s) who had fallen and broken his leg. The dad checked into a LTC facility for nine months because his wife couldn’t tend to his daily needs. The monthly cost of $8,000 (which was on the high end for that region at the time) came out to $72,000 and drained the couple’s retirement savings.
The father went back to work with little hope of recouping that hefty loss. The son was not interested in buying long term care insurance when I made inquiry (I had a license to sell it at that time).
There are two ways to go regarding planning for LTC:
People either pay money now for an insurance policy to protect against possible future LTC costs, with 50/50 odds of needing to file a claim, or take their chances of never needing it, thereby opting out of (and saving) the thousands of dollars of premium payments each year.
Without LTC insurance, someone whose health necessitates a permanent move into an assisted living facility or nursing home may elect to sell now-unneeded assets such as a car or house. Once saleable items and cash savings have been used up, Medicaid coverage is usually available, although it isn’t accepted at every facility.
Medicaid also provides some protections for a remaining spouse who doesn’t require LTC: “It generally allows the spouse who doesn’t need care to keep a reasonable place to live and enough assets and income not to force that remaining spouse into abject poverty.”
Discuss your LTC options with family members before assistance is needed, even if you decide an insurance policy isn’t the best option.
Make a plan for success and enjoy the peace of mind that comes from being prepared to handle the life-changing possibility of needing daily assistance for a prolonged period of time. You’ll be glad you did!