Most Americans — the affluent included — cite major medical expenses not covered by their insurance as a major financial concern. As health care costs rise, long-term care insurance is increasingly becoming a greater part of the financial planning process.
At least 70 percent of individuals over 65 are likely to require some form of long-term care service during their lifetime, according to the United States Department of Health and Human Services. Such costs can be substantial. The national median cost for a home health aide for an eight-hour day is more than $45,000 annually; full-time nursing home care has a median cost of roughly $80,000 annually; and it is expected that in 30 years, one year of care alone will cost $250,000, according to the American Association for Long-Term Care Insurance Sourcebook, 2012, and a Genworth 2015 Cost of Care Survey conducted by CareScout.
By helping provide for your care in cases of chronic illness or disability, you can help ensure your care and estate plans will be carried out according to your wishes.
Without planning, a long-term care event can potentially wreak havoc on a retirement portfolio or estate plan, says Tim Dona, Insurance Group Product Manager at U.S. Bank.
One of the biggest mistakes is being unrealistic about how long the benefits should last and how much will be needed. Advancements in health care have allowed us to live longer, but living longer can have insurance policy implications. “The old school of thought was you only needed two to three years of long-term care benefits,” Dona says. “Now, it is recommended that you consider planning for three to five years.” He suggests talking to your financial advisor, as individual needs will vary based on your unique situation.