Taking The Long View On Long-Term Care Six takeaways to discuss with clients when considering their future expenses should they need long-term care. • Ron Mastrogiovanni
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mericans recognize that they may require end-of-life long-term care, but many choose to roll the dice instead of planning for these future expenses, despite the best efforts of their advisors. When it comes to LTC, encouraging clients to adequately plan requires an understanding of both the expected costs and the probability that care will be needed. Drawing upon actuarial data and current LTC cost trends, HealthView Services’ most recent white paper, “LongTerm Care and Financial Planning,” and the planning tools it draws upon, provide this information as a foundation for LTC planning discussions with clients. Here are six key takeaways.
1. Three out of four married couples will incur significant LTC costs.
Long-term care may not be the easiest retirement planning issue to bring up with clients, but avoiding the topic not only puts their financial and legacy plans at risk but also risks their care expectations in the final years of life. A healthy 65-year-old male/female couple has a 44% and 56% chance, respectively, of needing some level of LTC if they each live to their actuarial life expectancies. Combined, there is a 75% chance that at least one spouse will require 50
end-of-life LTC. Assuming national average costs across all states and a blended average cost of care, the man can expect $237,368 ($123,881 present value) in total LTC costs. His spouse can expect costs of $373,712 ($183,841 present value), or 58% higher than her partner.
2. The duration of LTC costs reflects changing care needs and may be longer than clients anticipate.
Many LTC patients transition from home health care to assisted living to skilled nursing facilities. At each stage, clients will have to pay for different levels of service and cover generally increasing costs. They may start with a home helper for a few hours a day, and several years later require 24-hour care at a facility. The period in a skilled nursing home — that many associate with care — is only one component of the LTC journey. The high overall cost of LTC care reflects these different expenses and the duration for which care will be required — which for a man will be 660 days, on average.
3. Women face unique LTC challenges.
Actuarially, women are projected to live two to four years longer than men. For male/female married couples, this longevity difference — combined with data indicating husbands are, on average, 2.3 years older than their wives — means that most women will outlive their partners. As a result, they need to ensure they have the financial resources to address their own LTC needs, which as the data shows, will
InsuranceNewsNet Magazine » November 2021
Healthy 65-Year-Old Woman’s Probability Of Requiring LTC In Five-Year Attained Age Increments Attained Age*
LTC Probability
Age 70
5.6%
Age 75
13.9%
Age 80
27.2%
Age 85
43.9%
Age 90
58.3%
*Attained Age reflects a scenario in which the person lives to reach the age listed. Source: HealthView Services
Cost Of LTC Services In 2021, National Average* Type Of Care
Cost In 2021
Nursing Home
$100,913
Assisted Living
$55,708
Home Health Care
$56,408
Blended Average
$69,508
*44 hours per week of home health care, consistent with industry standard; blended average based on care probabilities for an 85-year-old male. Source: HealthView Services
in general be significantly more expensive than that of their male partner. On average, the duration of care for a woman across all settings will be about 11 months longer than for their spouse. Since LTC may be required after a woman’s husband’s end-of-life care has consumed a substantial portion of the couple’s savings, financial advisors need to work with couples — and women in
