As baby boomers retire in growing numbers, the need for long-term care services is exploding. Unfortunately, many of those retirees are finding out too late that long-term care is more expensive than they realized. They’re also discovering that public programs like Medicare don’t cover long-term care beyond the post-acute phase, and qualifying for Medicaid is challenging.
With 70 percent of Americans needing some type of long-term care after age 65, who’s footing the bill?
According to “The 5 Ws of Chronic Illness Care,” a report by Prudential, the U.S. spends about $725 billion a year on chronic illness. Here’s the breakdown of who’s paying for it:
- $7 billion paid by private long-term care insurance
- $10 billion paid by veterans, state, and local chronic care programs
- $64 billion by Medicare
- $130 billion by Medicaid
- $63 billion paid by families in out-of-pocket expenses
- $450 billion paid by families in the form of caregiving
Shocking but true: For every $100 spent on chronic care, $71 is paid for by families.
Thanks to advances in medical care and increased longevity, chronic illness patients are living longer. And due to the skyrocketing costs of long-term care and the fact that many people have no long-term solution to pay for long-term care, 80 percent of those patients receive their chronic care in private homes, with families picking up the tab. The Congressional Budget Office’s 2011 estimate put the value of that out-of-pocket care at a staggering $234 billion.
On top of the greater financial burden, family caregivers are taking on greater care responsibilities. In addition to the usual duties of dressing, bathing, feeding, and moving patients, family members are now taking on duties such as administering medications and intravenous therapies, helping with mobility tools such as walkers and canes, cooking meals and accommodating special dietary needs, and even dressing wounds.
So why do so many go without the peace of mind of long-term care insurance?
Between the statistics on long-term care needs, skyrocketing medical and long-term care costs, and the fact that most retirees consider long-term medical care one of their biggest retirement worries, it’s surprising how few people have planned for the inevitable with long-term care insurance. According to the Congressional Research Service, just over 10 percent of Americans aged 55 or older buy long-term care insurance for themselves.
That leaves millions vulnerable to financial hardship – on top of the challenge of caring for loved ones.
So how are families preparing for a long-term care need? Do they have any kind of plan in case one of their parents suffers a physical or mental illness and requires long-term care? Does anyone in the family have a home that is equipped to take care of a sick or elderly parent long term?
These are all vital questions your clients and prospects should carefully consider as more and more families take on the long-term care of an elderly parent. With the growing long-term care crisis, they can no longer afford to sweep this issue under the rug, believe it will never happen to them, or put their faith in the government to pay the tab.
We all need smart financial planning for our retirement years. To learn more about helping your clients avoid the financial struggles that are too often a part of providing LTC, download our LTCI Broker Kit today. Have a client that is a good candidate for LTCI? Request a long-term care insurance quote here.