There are many reasons, but most are due to:
(1) Americans are living longer;
(2) it is costing a lot more than expected for them to live; and
(3) long term care is not solely a “senior” issue:
- By 2025, for every 100 middle aged individuals, there will be 253 seniors;
- There is a 70% probability that an individual over age 65 will become cognitively impaired or unable to complete at least two activities of daily living-including dressing, bathing or eating over his or her lifetime.
- On the aggregate, of those who enter a nursing home, 50% will stay an average of 2.5 years; 10% will stay there five years or longer.
- Currently, individuals over the age of 50 control 75% of the nation’s wealth and half the discretionary income.
- 40% of people who need long term care are working-age adults between 18 and 64.
Although we are living longer, “living longer” is not always synonymous with “living better.” The longer we live, the more likely it is that at some point in our lives, we will need someone to help take care of us.
Insurance and other financial services companies, following these trends, realize the enormous importance of the “senior” market. “Senior” is a difficult term to define since people polled at various points in their lives who were asked to define “senior” varied greatly in their response. Those in their 20’s and 30’s tend to define senior as an individual 65 or over. People in their 40’s and 50’s often describe seniors as those in their late 60’s or 70’s. The 60 and 70 year olds questioned defined seniors as those in their 80’s and 90’s.
In spite of the fact that many seniors would be considered by many as “wealthy,” long term care costs are enormous and a lifetime of savings can be quickly exhausted when long term health care becomes necessary.
- 70% of single people who enter a nursing home are impoverished within one year.
- 50% of all couples are impoverished within one year of one spouse entering a nursing home.
- Private rooms in a nursing home in 2015 cost an average of $113,150 per year ($310 per day) from a high of $443 per day to $190 per day in the Providence-Warwick area.
THE WORST CASE SCENARIO
“What would you do if you were suddenly faced with an additional yearly expense of $113,150 or more? (This could double for a couple both of whom needed care simultaneously) How would this impact on your retirement planning? How long could you afford these costs? How would this additional expense affect the estate you wish to leave behind? How can we assure that you maintain your financial security and independence?”
Medicaid Planning and possibly Long term care insurance for those who qualify and can afford the policies are a partial answer to some of these troubling questions. Although it is estimated that in 2010 seven to nine million people had already purchased private long term care insurance, that number comprises only about one quarter of the 37 million Americans over age 65. The reason few obtain this insurance links back to the cost associated with the policies, the ready availability of them and the overall concern with their long term existence, meaning, will the policy be there when I need it?
Medicaid Planning as this site is dedicated to discussing and explaining, is an option for those who do not qualify or cannot afford a Long Term Care Policy, yet still seek to protect the assets they have earned during their lifetime.