One of the primary reasons that many people – regardless of income, savings, retirement, and more – need long term care insurance is that long term care can be considerably expensive. Those that need long term care often require it for more than a year, and this type of care is not covered by health insurance.
As a result, you typically have two options:
- You have to pay for the entirety of your long term care out of pocket.
- You have to exhaust your entire savings and then apply for Medicaid.
These are not mutually exclusive options either. If you have outstanding retirement, you may be able to pay for long term care with your monthly retirement, but very, very few people have that much retirement. Instead, without long term care insurance or alternative options, you typically will need to pay for it with your retirement savings until those savings are exhausted, after which you will need to apply for Medicaid. Your long term care provider may also not accept Medicaid.
So how much does long term care cost? How much would you need to have available?
Cost by Type of Care
The first consideration is the type of care. Perhaps surprisingly, the cheapest option for long term care is usually in-home care, although this can vary and it is only part time – full time in-home care is often prohibitively expensive. Costs are, on average:
- In-home care typically costs less, with an average of $4,500 to $5,500 per month for part-time professional assistance.
- Assisted living facilities average $4,000 to $6,000 per month, depending on the level of care and amenities provided.
- Nursing homes are the most expensive, with semi-private rooms averaging $7,500 per month and private rooms exceeding $8,500 monthly.
As always, keep in mind that this is often a wide range. Some in home nurses may be well over $10,000. Other nursing homes may be available at a lower rate. But these are loosely the costs associated with long term care.
Duration of Care
Monthly costs might be more manageable for some if they were temporary. But, at least on average, many people need long term care for an extended period of time.
There are many different conditions that may require long term care, so the exact length of time may vary. But women typically need long term care for an average of 3.7 years, while men need it for an average of 2.2 years. Either way, that means that a person may need it for 24 to 48 months or more. Not everyone will need long term care for this long, or at all, but those that do will have substantial costs as a result.
Geographic Location
It should also be noted that some places have more expensive long term care than others. The cost of long-term care varies dramatically by state and region. Urban areas and states with higher living costs will often have more expensive care options compared to rural areas. If you currently live somewhere with a high cost of living, it may be a good idea to assume that your costs will be higher.
Estimating Your Own Long Term Care Costs
It should also be noted that long term care costs are not static. Most planning for long term care starts when a person is in their 50sm, but they may not need long term care until their 70s or 80s. Inflation may cause the costs of long term care to rise considerably, so if the average cost is $5,000 now, it may be a good idea to assume a cost of $8,000 or higher (for example) as you try to estimate what your long term costs may be,
Why These Costs Matter
In most situations, the cost for this care will need to be covered by the individual. Very few people these days have retirement savings that allow them to easily cover $5,000 to $10,000+ in long term care costs, especially given the level of care they desire.
Some Medicaid programs may pay for some forms of long term care eventually, but only after retirement costs have been exhausted, and only certain forms of long term care. If your intention was to pass money on to your heirs, or spend money during your retirement on things of interest, long term care becomes likely to exhaust these savings.
That is why many experts recommend long term care insurance (LTC insurance) and why we specialize in this type of insurance here at Long Term Care Resources – Pacific Agency (LTCR Pacific).
Saving for long-term care is an important aspect of financial planning. Estimating costs, factoring in inflation, and exploring alternative funding options can help ensure you’re prepared. But the one tool that we have to help reduce the financial burden of these costs is long term care insurance. If you’d like to see if you qualify, please reach out to LTCR Pacific today.