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No LTC Insurance? The Cost Could Be Astronomical

Posted October 7th, 2012 in Insurance by Jeremy Waller


In my last post I talked about the importance of having long term care insurance. Chances are, you’ll need some sort of assistance as you get older. If you don’t have family that is willing and able to help, the cost of care can quickly eat through your retirement savings.

Depending on the type of care you need, your our of pocket costs could be anywhere from nothing to well over $100,000 per year. You may be fortunate in that you never need any significant kind of assistance. But, it’s also quite possible that you will need the care provided by a full time nursing facility.

The costs associated with the different kinds of care providers vary depending on the level of assistance you need.

Best and Worst Case Scenarios

Obviously the best case is that you never need any kind of assistance. But it’s not very prudent to assume that this will be the case though.

Adult Day Care

The next best case is if you have family who is able to help. Even in this case it’s likely that someone isn’t going to be available to help 24/7. That’s where an adult day care comes in. An adult day care can provide the assistance needed when family isn’t available.

An adult day care can run anywhere from $40 to $100 per day. If this is needed on a regular basis, the cost can add up quickly.

Home Health Care

The next option is home health care. This allows you to continue to live in your own home while getting the assistance you need. These caregivers are very flexible and can be available to help full time or just a few hours a week A full-time home health aide will cost around $45,000 per year on average.

Assisted Living

If more assistance is needed, you may end up in an assisted living facility. These facilities are designed to provide assistance with day-to-day tasks, but typically do not provide any significant level of medical care.

On average the cost is on par with a home health aide, but your standard of living will likely be lower. A large unit at a nice facility can be 2 or 3 times more expensive.

Nursing Home

The last option is a full-time nursing facility. These facilities are equipped to those who are bed bound, require more physical assistance than an assisted living facility can provide or have a severe mental illness such as Alzheimers or Dementia.

These facilities are typically charged at a daily rate which works out to $77,000+ per year on average.

The Default Option Isn’t Very Good

If you chose to do nothing you may end up in a bad place – both relationally and physically. There are countless stories of children who have no choice but to care for their parents when they are no longer able to do so one their own.

Many people are ridden with guilt at the thought of putting their parents in a nursing home. The decision is made even more difficult if the parent does not have the financial means to pay for it.

You may think that you can just rely on medicaid to pay for your care. That option is riddled with problems though.

First to qualify for medicaid you have to essentially be at the poverty level. That means you’ll have to sell practically everything you own and those assets will have to be used to pay for care. Only once those resources are exhausted will medicaid pay for care.

Medicaid will also only pay for care in certain facilities – which may be lower than the standard that you would prefer.

The bottom line is, it is imperative that you plan for care as you age. You can plan to pay out of pocket, but you need to ensure that you adequately plan for the worst case scenario. Consider the cost of a nursing home in your area – adjust for inflation – and make sure that your plan for retirement is sufficient to cover that amount.

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One Response so far.

  1. Hopefully people correct there situations so that they don’t end up costing themselves in the long run. I never really thought much about LTC insurance just figure my kids would take care of me or we would have enough saved to cover that aspect of life and retirement.

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