Older Couple

70 percent of people over age 50 will need nursing home, assisted living or in-home care at some point in their lives.  The cost for these services can be devastating to your retirement nest egg and estate.  For example, The Wall Street Journal states an assisted living facility on average is $3,600 a month which represents $43,200 a year.  A nursing home with a private room is $7,500 a month or $83,000 a year.

Let’s contrast that with the actual cost of a long term care plan.  An individual female at age 55 would cost an average of $1,900 a year for a long term care policy while a male age 55 is $1,567 a year.  And a couple (both age 60) would cost an average of $3,050 a year.  Let’s compare that with this example:  premiums for 20 years would total $31,340 for a single male.  Yet, in one year, in an assisted living facility, you will blow through $43,200 and, in a nursing home, $83,000.

So why don’t people buy long term care insurance?  Here’s the biggest objection I typically hear.  What if I pay all this money, and I don’t use it?  Well, for 70 percent of the population that’s not going to happen—you’re going to use it.  For the remaining 30 percent there are return of premium options available if you don’t use the policy.

Here’s the deal:  long term care isn’t about long term care.  It’s about protecting your estate.  My mother was in a nursing home for 10 years.  Do the math.  At $43,200 a year, that’s $432,000 spent.  However, 10 years is an unusual length of time for people to stay in a nursing home–the average stay is about 2 ½ years.  At $83,000 a year, that’s a $166,000 spend vs. purchasing the long term care policy for 20 years at a cost of $31,340.  That seems like a pretty good return on your money if you ask me.

Here’s the other great misconception:  people believe they will qualify for government assistance to help them pay for their nursing home care.  In fact, the current rules for Medicaid nursing home assistance typically have a 5 year look back, and you have to meet very strict requirements, liquidating your assets to qualify.

Then there’s the dignity issue.  How would you feel about your son or daughter assisting you with a bath or a shower or your toilet functions?  Saddling a relative (be it your wife, your son or your daughter) with the caregiver role can be devastating to family members from a physical and psychological standpoint.  And, in America, we are not a society that likes to have parents move in with their children (unlike  Asian or European society).  The first order of business in most American families when Mom can’t take care of herself is to get her in a nursing home or an assisted living facility.  The next question is:  how long will the money last?

A long term care policy protects your estate, your dignity and your independence.  If you’re 55 and you haven’t purchased one, you’re probably making a big mistake.  And, when the chickens come home to roost, it won’t be a good time for you or your family.

Cary Hall

America’s Healthcare Advocate