Understanding Long-Term Care

Creating a plan is crucial to ensure you won’t outlive your financial resources.

It might be hard to imagine now, but chances are you’ll need some help taking care of yourself later in life.

The U.S. Department of Health and Human Services estimates that 70% of people over age 65 can expect to need long-term care services at some point in their lives. So for most people, it’s not a matter of if you’ll need extended care, but when. The big question is: how will you pay for it?

For current retirees and those nearing retirement, healthcare costs are expected to pose the single greatest risk to income in retirement. 

And as healthcare costs continue to rise—a recent study1 reports that a 65-year-old couple retiring in 2019 can expect to spend $285,000 in healthcare and medical expenses throughout retirement—it’s important to understand the different types of long-term care and what you can do to prepare financially. 

What is long-term care?

Long-term care refers to a variety of medical and non–medical services needed by those who have a chronic illness or disability most commonly associated with aging.

Extended care can include everything from assistance with the activities of daily living—help getting dressed, using the bathroom and bathing, or even driving to the store—to more intensive therapeutic and medical care requiring the services of skilled medical personnel. Extended care may be provided at home, at a community center, in an assisted living facility, or in a skilled nursing home.

Long-term care can be a significant expense. The 2020 national average for care in a skilled care facility (single occupancy in a nursing home) was $105,850 a year. The national average for care in an assisted living center (single occupancy) was $51,600 a year. Home health aides cost a median $24 per hour, but that rate may increase when a licensed nurse is required. Depending on the duration and type of care needed, long-term care can range anywhere from $19,000 to $106,000 per year, according to Statista. 

When planning for your healthcare needs in retirement, it’s important to keep in mind that Medicare, Medicare supplement plans, and private medical insurance don’t cover long-term in-home maintenance or nursing care.

Pamela Malara has been a financial advisor for 23 years, the last three at Cetera Investment Services.
How can you plan ahead?

Long-term care insurance was developed to fill this void and help retirees manage the impact of rising healthcare costs. 

A long-term care policy helps cover the costs of regular care when you have a chronic medical condition, disability, or disorder such as Alzheimer’s disease. A long-term care policy can cover different levels of care, from skilled nursing care to home health support. Along with this coverage, long-term insurance can include the costs associated with assisted living facilities, adult daycare centers and the medical equipment and supplies used in your residence during periods of recovery.

“The right policy and coverage can help protect the income you and your spouse rely upon in retirement to maintain your lifestyle and choose the type of care you prefer—when and if you need it,” says BSF investment representative Pamela Malara, with Cetera Investment Services. Malara has worked as a professional financial consultant for over 20 years. “Many find it to be an appropriate way to protect themselves and their loved ones from the potentially devastating cost of long-term care.”

How much does long-term care insurance cost?

The costs of long-term care insurance can vary widely, depending on several key factors. 

  • Your age and health: The older you are and the more health problems you have, the more you’ll pay when you buy a policy.
  • Gender: Women generally pay more than men because they live longer and have a greater chance of making long-term care insurance claims.
  • Marital status: Premiums are lower for married people than for single people.
  • Carrier policies: Prices for the same amount of coverage will vary among insurance companies. That’s why it’s important to compare quotes from different carriers.
  • Amount of coverage: You’ll pay more for richer coverage, such as higher limits on the daily and lifetime benefits, cost-of-living adjustments to protect against inflation, shorter elimination periods, and fewer restrictions on the types of care covered.

“If you’re considering long-term care insurance, now is the time to learn more,” Malara says. Typically, the younger you are when you purchase the policy, the lower the monthly premium, she explains. “Financially preparing for long-term care now means that you're saving while you have a steady income, and you're placing a smaller financial burden on your spouse or children.” 

The uncertainties of life are wide ranging, and many of them can threaten the financial security of you and your family. If you’re wondering whether long-term care insurance or another strategy may be right for you, call (225) 635-0047 to schedule an appointment. 

Click here to use the Cetera calculator tool to determine your potential long-term care needs and how long your current assets might last.

Securities and advisory services offered through Cetera Investment Services LLC, member FINRA / SIPC, a broker-dealer and registered investment adviser. Cetera is under separate ownership from any other named entity.

Investments are: Not FDIC/NCUSIF insured | May lose value | Not financial institution guaranteed | Not a deposit | Not insured by any federal government agency.

This site is published for residents of the United States only. Registered Representatives of Cetera Investment Services LLC may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every advisor listed. For additional information please contact the advisor(s) listed on the site, visit the Cetera Investment Services LLC site at www.ceterainvestmentservices.com.

Joseph & Pamela Malara
Financial Consultants
5681 Commerce Street
St. Francisville, LA 70775

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