Long-Term Care

ICMA-RC wants to help ensure that you are prepared to handle any retirement expenses you might face. One of the expenses that should be considered is long-term care. Healthier lifestyles and medical advances are allowing people to live longer but are also increasing the likelihood that long-term care for you, or a family member, may be needed at some point.

What Is Long-Term Care?

Long-term care (LTC) refers to medical and social services designed to support the needs of people living with chronic health problems. Its primary focus is custodial care to help with everyday "activities of daily living" (ADL), including bathing, dressing, eating, toileting, continence, and transferring from a bed to a chair and back.

Will You Need Long-Term Care? How Much Does It Cost?1

  • About 70 percent of individuals over age 65 will require at least some type of LTC services during their lifetime. Over 40 percent will need care in a nursing home for some period of time.
  • On average, someone age 65 today will need some form of LTC services for three years; 20 percent will need care for more than five years.
  • In 2018, the average monthly cost for a private room in a nursing home was $8,365.

How Do People Pay Long-Term Care Costs?

  • Medicare provides only limited short-term coverage and, like most private health insurance, does not pay for custodial care.
  • Medicaid covers the entire bill for certain long-term care, but is designed only for those with very low income and assets. Strict rules govern how and when a person becomes eligible for Medicaid. Care is primarily for nursing homes; care at home and at assisted living facilities is very limited.
  • Savings can be used, but they could be quickly depleted by the high annual costs associated with LTC.
  • Long-term care insurance is a type of insurance that specifically covers some or all of the costs of LTC services, depending on the policy, and the provisions you choose. The potential advantages, as well as limitations, should be especially considered by investors nearing, transitioning into, or in retirement with enough assets that they are unlikely to qualify for Medicaid but not enough to reliably pay for long-term care without assistance.

Questions?

For answers to questions regarding how to best plan for retirement and the role long-term care insurance can have on your retirement, please contact your plan’s ICMA-RC representative.

 

1 Sources: U.S. Department of Health & Human Services and Genworth 2018 Cost of Care Study

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