Rick Kahler: Creating a plan for long-term care
Last week’s column concluded that, while long-term care insurance is unaffordable for most Americans, everyone needs a long-term health care plan.
Knowing how long you may live is one of the first variables to consider in putting together such a plan. A number of online sites can give you a scientific estimate of your life expectancy. I recently retook the evaluation at livingto100.com and was surprised that my life expectancy had increased from 98 to 100 since 2016.
Two major issues to consider in creating your own long-term care plan are where you will live and how you will pay for the care you are likely to need. In part because of cost, most seniors want to stay in their own homes.
In order to make this more likely, it’s important to consider in advance issues like the following:
- The proximity of grocery stores, medical facilities, and other needed services.
- The accessibility of your home. Can you live on one level, remodel for handicapped access, accommodate ramps, have space available for possible live-in help, etc.?
- A plan for home maintenance, paying bills, shopping, and transportation.
- The availability and estimated cost of in-home support and medical services—and your willingness to use them.
- Access to an emotional/social support system of friends and family.
Even with a goal of staying in your home, your plan needs to consider how to determine if and when that is no longer possible. This might be when friends or family feel it’s a safety issue, or when you can no longer perform certain functions.
The second large concern, of course, is how to pay for long-term care. Costs not covered by Medicare that we pay for out-of-pocket include nursing facilities (the most expensive), followed by assisted living facilities, independent living apartments, adult day care, and in-home care. This is where LTC insurance can come in handy, except that it is unaffordable for most, it often doesn’t cover all the costs, and insurance companies routinely try to deny claims.
Obviously, with most people not being able to afford paid long-term care, most such care is unpaid. According to AARP, in 2017 over 41 million family caregivers in the U.S. provided an estimated 34 billion hours of care to an adult with limitations in daily activities. The estimated economic value of their unpaid contributions was approximately $470 billion.
Studies show that unpaid caregivers, typically family members, provide an estimated 80 percent of care to individuals still living at home. The average caregiver spends 16 – 24 hours a week. The worth of their time averages about $30 an hour, making their services worth around $30,000 a year. Most are 50 to 64 years old, and they will serve as caregivers for an average of four years.
This statistic has become very real to me. My wife is the medical advocate for all four of our aging parents. The time requirement of daily phone calls, online research, attending medical appointments, coordinating between health care workers, and running errands is a part-time job.
Based on my research, the cost to caregivers in lost wages, benefits, and out-of-pocket expenses ranges from $150,000 to $750,000, with the average being about $300,000.
The more retirement savings you have, the more you can avoid placing this burden on your family members. If you are approaching retirement without adequate income, you may want to consider working longer and reducing spending now in order to provide for your long-term needs. To increase your options for living in comfort and dignity as you age, it helps to create your own long-term health care plan before you need one.
Rick Kahler is president and owner of Kahler Financial of Rapid City.